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C h a p t e r 2 A p p l i c a t i o n s o f a r i t h m e t i c 53

CommissionA commission is a percentage of the total value of the goods sold which is paid to thesalesperson. Paying commission is a method used to motivate salespeople to work hardand sell more products. (The more goods a salesperson sells, the more he or she will earn.)

Apart from commission, most salespeople also receive a certain fixed amount perweek, called a retainer, which does not depend on sales.

The following examples show different types of problem involving commission.

Peter works in a menswear store. He earns 3% commission on all sales on top of his retainer of $200 a week. Find Peter’s wage in a week in which he sells clothes to the total value of $7400.

THINK WRITECalculate the commission by finding 3% of $7400.

Commission = 3% of $7400

= × 7400

= $222Find the total wage by adding the retainer to the commission.

Total wages = Commission + Retainer= $222 + $200= $422

Write the answer. In the week in question Peter’s wage was $422.

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3100---------

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In one especially good week Peter earned $1020 in commissions. Find the total amount of his sales during that week if his rate of commission was 3% as in the previous example.THINK WRITE

Identify the unknown. Let the amount of total sales be x.

Write the expression for the commission. Commission = × Total sales

Substitute the known values into the expression. 1020 = × x

Solve for x. 1020 = 0.03xx = 1020 ÷ 0.03x = $34 000

Write the answer. Peter’s sales totalled $34 000.

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100---------------------

33

100---------

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Chapter 2 Gen Maths Page 53 Wednesday, December 15, 1999 6:15 PM

54 G e n e r a l M a t h e m a t i c s

While holidaying in Queensland, Peter spent all of his holiday money during the first3 days and decided to work on commission at a local market to help himself out.

Sometimes the rate of the commission varies with the total of sales. Variable rates ofcommission are used in the real estate industry. They are usually referred to as ‘com-mission on a graduated scale’.Note: Rates vary from State to State and company to company; some ‘retainers’ areadvances against commission, and are deducted from commissions earned.

Find the rate of Peter’s commission if he earned $216 on a total of $3600 worth of sales.THINK WRITEMethod 1

Identify the unknown. Let the commission be x%.

Write the expression for commission. Commission = × Total sales

Substitute the known values into the expression.

216 = × 3600

Solve for x. 216 = 36x

x =

x = 6%Write the answer. The rate of Peter’s commission was 6%.

Method 2

Since the commission is a percentage of total sales, express $216 as a percentage of $3600.

= 6%

Write the answer. The rate of Peter’s commission was 6%.

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100---------------------

3x

100---------

4

21636

---------

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1216

3600------------ 100%×

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A real estate agent earns $280 per week retainer plus a commission which is calculated as follows:1.5% on all sales under $50 000 (or the first $50 000 in a larger sale)2% on all parts of sales between $50 000 and $80 0002.5% on all parts of sales above $80 000Find the wage of the agent in the week in which she sold a house for $126 000.

THINK WRITE

Find 1.5% of $50 000. 1.5% of 50 000= 0.015 × 50 000= $750

Find the amount of money (the part of the sale) in the 2% commission bracket.

$80 000 − $50 000 = $30 000

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Commission

1 Marina works in a hardware store. She earns $180 retainer per week plus 4% com-mission on all sales. If in a particular week she sold hardware products to the totalvalue of $8900, find her wage for that week.

2 Isec is selling computers and earning a com-mission of 9% (no retainer). During oneweek he sold 5 computers valued at $3500each. What was his total wage that week?

3 Kay is working in a large department storefor Visage (a cosmetic company). Sheearns a retainer of $300 per week for 5working days plus 10% commission on allsales. During a ‘facials’ promotion weekshe also earns $20 for each facial that sheconducts. In one day she did 7 facials andsold her clients different products to thetotal value of $1089. Find Kay’s earningsfor that day.

THINK WRITEFind 2% of $30 000. 2% of $30 000

= 0.02 × 30 000= $600

Find the amount (the part of the sale) above $80 000 (the 2.5% commission bracket).

$126 000 − $80 000 = $46 000

Find 2.5% of $46 000. 2.5% of $46 000= 0.025 × 46 000= $1150

Find the total commission. Total commission = $750 + $600 + $1150= $2500

Find the total wage. Total wage = Commission + Retainer= $2500 + $280= $2780

Write the answer. The total wage of the agent during the specified week was $2780.

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remember1. A commission is a percentage of the total value of the goods sold, paid to the

salesperson.2. A retainer is a fixed amount which can be paid to the salesperson on top of the

commission, and which does not depend on sales.

remember

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Mathcad

Commission



4A jewellery salesperson earns 12% commission on all sales. If she sold two rings, onevalued at $400 and the other at $280, which of the following could not be used toevaluate her total commission?

A B 680 × 0.12 C

D E 12 × (400 + 280)

5 Lilia works in an electrical goods section of a department store. She earns 7%commission on all sales. If Lilia’s earnings are $304.50, find the total of her sales.

6 Amanda earns a retainer of $250 per week plus 8% commission on all sales. If herweekly wage is $384.40, find the total of Amanda’s sales during that week.

7 On the school holidays Daniel was helping out in his uncle’s store. One day he managedto sell goods to the value of $800 and was paid $36. What was his commission rate?

8 John is selling life insurance policies. He is paid $1000 retainer each month plus thecommission. In October he sold several policies to the total value of $36 050 andreceived $3884 in wages. What percentage commission is John paid?

9 A real estate agent is paid $300 per week retainer plus a commission, calculated as:1.2% on all parts of sales up to $50 000; 1.8% on all parts of sales from $50 000 to$90 000 and 2.5% on all parts of sales above $90 000. If, in one week, he sold aproperty valued at $175 000, find his earnings for that week.

10 During one week the real estate agent in question 9 earned $4370. What was the valueof the property that he sold?

11 Jim sells women’s clothes, and receives $200 retainer and 12% commission on allsales. Jill sells men’s clothes, and receives $250 retainer and 10% commission.a If in a certain week each of them sold clothes to the total value of $2000, who is

better off and by how much?b What value of total sales do Jim and Jill have to make so that they both receive $600?

mmultiple choiceultiple choice

12100--------- 680× 12

100--------- 280

12100--------- 400×+×

400 280+100

------------------------ 12×

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WorkS

HEET 2.1



Payroll calculationsIn the previous section we considered a particular type of income called commission.However, there are also many other ways in which people earn a living.1. Some employees are paid piece rates: a fixed amount of money for each piece of

work. For example, a tailor might be paid a certain amount for each piece of clothing.2. Self-employed people usually charge fees for their services. You may be familiar

with the system of fees charged by doctors or lawyers.3. Other self-employed people, such as building contractors, are paid a fixed price for

completing specific jobs.4. Another type of income is wages. Wages are paid weekly or fortnightly at a certain

hourly rate.5. Most people in professional occupations (engineering and computer programming)

are paid a fixed annual amount called a salary. A salary is paid fortnightly or monthly.In this section we shall consider several types of payroll calculations.

WagesAn employee who works for wages is paid a normal hourly rate for an agreed numberof hours per week (which varies and could be, for instance, 37.5 h or 40 h per week).An employee who works extra hours (overtime) is then paid either 1.5 or 2 times thenormal rate, called ‘time-and-a-half’ and ‘double time’ respectively. The payrollcalculations are based on time sheets — a record of the amount of time each employeespends on work — filled in by the employee.

Gerry earns $10.40 per hour and works a 38-hour week. If he works overtime, he is paid time-and-a-half for the first 3 hours and double time for the remainder. According to his time sheet he worked 48 hours one week. Find his wage (before deductions) for that week.

THINK WRITE

Calculate the payment for the normal award hours.

Normal time: 38 hours at $10.40 per hour= 38 × 10.4= $395.20

Calculate the time-and-a-half payment. Time-and-a-half:3 hours at $10.40 per hour × 1.5= 3 × 10.4 × 1.5= $46.80

Find the number of hours worked over the normal hours and the time-and-a-half hours.

Double time hours= hours worked − normal hours − = time-and-a-half hours= 48 − 38 − 3= 7 hours

Calculate the double time payment. Double time: 7 hours at $10.40 per hour × 2= 7 × 10.40 × 2= $145.60

Find the total amount of money earned that week.

Total earnings = 395.20 + 46.80 + 145.60= $587.60

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Chapter 2 Gen Maths 7 Wednesday, December 15, 1999 6:15 PM


SalariesAn employee who works for a salary is paid a fixed amount each week. Payment forovertime work is usually at the discretion of the employer. Some employers assume that,if required to, an employee should work a few extra hours without being paid for it,while others agree to pay for the overtime work.

Alex is a computer programmer. His annual salary is $36 600 (based on a 52-week year, and a 37.5-hour, 5-day week). During one month, in order to complete a project on time, management asked employees to work on weekends for a flat rate of $30 per hour. During four consecutive weeks Alex worked during the week and also his normal daily hours on the weekends. Find the amount that he earned over that period of time.

THINK WRITE

Find the weekly rate of pay. Weekly payment = annual payment ÷ 52= 36 600 ÷ 52= $703.85

Find the normal payment for the given period of time (that is, 4 weeks)

Normal payment for 4 weeks = 4 × 703.85= $2815.40

Find the number of normal daily working hours.

Daily number of hours= weekly number of hours ÷ 5 days= 37.5 ÷ 5= 7.5 hours

Calculate the daily payment on the weekend.

The weekend daily payment= normal hours × 30= 7.5 × 30= $225

Find the number of days he worked overtime.

Number of days worked overtime= 4 weekends= 4 × 2 days= 8 days

Calculate the total overtime payment. Total overtime payment = 8 × 225= $1800

Calculate the total payment for 4 weeks.

Total payment= normal payment + overtime payment= 2815.40 + 1800= $4615.40

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PieceworkUnder the piecework system, payment depends on performance: the more items made,the more a person will earn, because a fixed amount is paid for each item produced.However, to motivate employees to increase their production rate, an employer canintroduce a bonus payment for each item produced over a certain fixed number. Also,an employer can pay different rates for different types of job.

Joseph receives an age pension and earns extra income by delivering advertising material. He is paid $19.60 for every 1000 brochures he delivers. If he delivers more than one type of brochure to each letterbox he is paid an extra $6 per 1000 for each additional type of brochure. In Joseph’s area there are 2400 mail boxes. Calculate his earnings from a delivery which includes Q-mart, Focus and Sellwell Supermarket brochures.

THINK WRITE

Calculate the payment for delivering 1000 sets of 3 brochures.

1000 sets of 3 brochures:$19.60 for Q-mart brochure plus $6 each for Focus and Sellwell.

Total: 19.60 + 6 × 2= $31.60 for every 1000 sets of 3 brochures

Calculate the total payment for delivering 2400 sets.

2400 sets = 2.4 thousand setsTotal payment = 2.4 × 31.60

= $75.84

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remember1. Wages are paid at a normal hourly rate for an agreed number of hours per

week.2. Overtime is paid at 1.5 or 2 times the normal hourly rate, known as time-and-

a-half and double time respectively.3. Salary is a fixed amount per annum, based on a 52-week year, and is paid in

equal monthly or fortnightly instalments.4. Salary earners are often expected to work overtime without extra payments.5. Piecework earners are paid a fixed amount for each item produced.

remember



Payroll calculations

1 Natasha works at the pharmacy and is paid $11.20 an hour for a 40-hour week. If sheworks overtime, she is paid time-and-a-half for the first 5 hours and double time there-after. If in one week Natasha worked 52 hours, find her wages before deductions suchas tax.

2 A printery employee earns $10.50 an hour for a normal 8-hour day Monday to Friday.Any overtime on weekdays is paid as follows: time-and-a-half for the first 3 hours thendouble time thereafter. Any hours worked on the weekend are paid at double time. Copyand complete the time sheet and calculate the wages of the employee for this week.

3 A building contractor employs a team of electricians. The hourly rate for electriciansdepends on grade: a P-grade (apprentice) electrician is paid $8.60 an hour, a B-gradeelectrician is paid $12.50 an hour and an A-grade electrician, $14.70 an hour.

The normal week is 37.5 hours. The first 2 hours of overtime are paid at time-and-a-half and every hour after that at double rate. Fill in the time sheet below and calculatethe total wages for each employee.

Name Time Sheet

Day On Off On Off Normalhours

Time-and-a-half hours

Double time hours

Monday 7.30 11.30 12.00 4.30Tuesday 7.30 11.30 12.00 4.00Wednesday 7.30 12.00 12.30 5.30Thursday 7.30 11.30 12.30 4.30Friday 7.30 11.30 1.00 5.30Saturday 8.00 12.00Sunday 8.00 11.00

Total:

Employee Grade Total hours Normalhours

Time-and-a-half hours

Double time hours

R. Santino B 45.5

J. Smiles A 53

A. Hopkins P 37.5

B. Andrews B 44.5

C. Watson P 38

P. Martin P 42

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12EXCEL

Spreadsheet

Payrollcalculations


C h a p t e r 2 A p p l i c a t i o n s o f a r i t h m e t i c 614 Naoum is a mechanical engineer. His annual salary is $44 500 for a 52-week year,

37.5 hours a week, Mon-day to Friday. During the Christmas shut down (which lastedfor 2 weeks), Naoum worked 12 hours a day Monday to Friday and 6 hours a day onthe weekends. If all overtime hours during the shut down are paid at a fixed rate of $35an hour, find Naoum’s earnings (before deductions) during that period of time.

5 Michael works at the real estate agency as a clerk. He has a base annual salary of $27 500,working 52 weeks a year, 8.30 am to 4.30 pm Monday to Friday. He can earn extramoney by working overtime. Any extra hours that he works on weekdays are paid attime-and-a-half and on Saturdays at double time. During one week Michael worked thefollowing hours: Monday to Wednesday normal time (8.30 am to 4.30 pm), Thursday8.30 am to 5.00 pm, Friday 8.30 am to 6.00 pm and Saturday 9.00 am to 1.00 pm. Find:a Michael’s base weekly paymentsb Michael’s base hourly paymentc the number of overtime hours that he worked during the week daysd the number of hours he worked on the weekende the total overtime payment for that weekf the total earnings for that week, before any deductions.

6 To make a T-shirt, parts are traced onto the material using a pattern and then cut. Acutter is paid $20 for cutting every 100 standard T-shirts. If a T-shirt contains any extraparts, the cutter is paid an extra $4.50 for each 100 parts. Find the amount of moneythat a cutter will earn cutting an order of 360 T-shirts with two extra parts.

7 Maxim is a part-time student and is earning his pocket money by gluing togetherenvelopes. He is paid 6 cents per envelope plus 3 cents bonus for every envelope over300. Calculate the amount that Maxim earns, when he assembles:a 280 envelopes b 430 envelopes.

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Career profileNOELENE CLAUSEN — Sandwich Hand/Lunch Lady

Qualifications: 25 years experience in hospitality industry with food preparation, waitressing and public relationsEmployer: Caters by appointment

y day begins at 8.00 am when I collect bread and cakes from the bakery. I

organise 2 trolleys with food, drinks and float money and assist with any remaining food preparation. I leave the shop at 8.50 am and begin the lunch round, delivering and selling food to various offices in the Box Hill or Burwood areas. I return to the shop at 12.30 pmand count everything that has not been sold and

restock the drink basket and refrigerator for the next day.Addition and multiplication are tools I use everyday. I

mentally calculate the customer’s total purchases and determine change due to the customer. I estimate each day’s supply of drinks, cakes sandwiches and snack foods which is

dependent on the time of year, day of the week and office location.

For the bakery, I determine the amount of raw materials and ingredients needed as well as costs involved with the purchase of materials, labour, transport, lease of the shop and other overhead costs. My job also involves calculating wages, paying company taxes and pre-determining charges to clients to maintain business profitability.

Mathematics is essential to my work, whether it is with metal calculations needed for assisting customers or other financial calculations to maintain the smooth running of the business.Questions1. Name three activities that Noelene is responsible for.2. What overhead costs would a bakery incur?3. Find out whether overtime rates apply for the wages of

employees at a bakery near you.4. Research a hospitality course that would give you the

skills Noelene has learnt over 25 years.

M



Income taxPersonal income tax is deducted from the wages or salaries of all employees to providethe government with the money for such things as financing hospitals and schools,building roads and supporting pensioners and unemployed people.

Although the taxation system is frequently adjusted, the following components of thesystem remain the same:

1. The financial year is the period from 1 July of one calendar year to 30 June of thenext year. Tax is charged during the financial year.

2. Gross employment income is the amount of money earned before tax.3. A group certificate is issued to the employee at the end of each financial year by

the employer. It shows gross employment income and the amount of tax alreadypaid.

4. Total income is the annual income of the person from all sources. (For some peopletotal income = gross employment income, while for others it also includes interest,dividends, royalties and so on.)

5. Deductions are expenses that you are allowed to subtract from your gross income(so that you pay less tax). For example: uniform cleaning, travel expenses, depreci-ation (on tools, a computer or other work-related equipment), work-related studyexpenses, professional body membership fees, charity donations and so on.

6. Taxable income is the portion of income on which tax is charged.Taxable income = gross income − deductions.

7. Rebates are the amounts of money by which the tax is reduced, usually granted fordependants in the earner’s care (for example, the spouse rebate), or some paymentsthat the earner makes (for example the medical expenses rebate).

8. Tax payable = tax on taxable income − rebates.9. The scale of rates is the scale used to calculate the tax on taxable income.

Throughout this section the following scale of rates will be used:

10. The PAYE (pay as you earn) scheme is the system that applies to most employees.Regular tax instalments are deducted from every payment.

11. Balance owing is the amount of tax still to pay if the tax instalments deductedduring the financial year are less than the tax payable.

Balance owing = tax payable − instalments12. Refund due is the amount which will be returned if you paid more tax than you

had to. Refund due = instalments − tax payable

Taxable income Tax

$0–$6000 Nil

$6001–$20 000 Nil + 17c for each $1 over $6000

$20 001–$50 000 $2380.00 + 30c for each $1 over $20 000

$50 001–$60 000 $11 380.00 + 42c for each $1 over $50 000

$60 001 and over $15 580.00 + 47c for each $1 over $60 000



Using the given scale of rates, calculate the amount of tax payable on a taxable income of $42 500.THINK WRITE

Identify the income bracket in which the given income belongs.

$42 500 is in the $20 001–50 000 bracket

From the table identify the pre-calculated amount of tax payable.

Tax on $20 000 = $2380.00

Find the amount of income over the initial category amount, specified in the table.

Income above $20 000 = $42 500 − 20 000= $22 500

Calculate the tax on the remaining income, using the rate from the table.

Tax on $22 500 = 0.30 × 22 500= $6750

Find the total amount of tax payable. Total tax payable = $2380 + $6750= $9130

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During the financial year Shanita earned a $56 600 salary; she also received a $70 dividend from Optra shares and $250 from interest on a long-term deposit. Her total deductions were $3070 and her total rebates were $1220. During the year Shanita paid $13 466 in tax instalments. Find the amount of refund due back to Shanita.THINK WRITE

Find the total income by adding Shanita’s income from all sources.

Total income = $56 600 + $70 + $250= $56 920

Find the taxable income. Taxable income = total income − deductions= $56 920 − $3070= $53 850

Find the tax on the taxable income: identify the income bracket.

$53 850 is in the $50 001–$60 000 bracket

From the table identify the pre-calculated amount of tax.

Tax on $50 000 = $11 380

Find the income above the initial amount from the table.

Income above $50 000 = $53 850 − $50 000= $3850

Calculate the tax on the remaining income using the corresponding rate from the table.

Tax on $3850 = 0.42 × 3850= $1617

Calculate the total tax on the taxable income.

Total tax on taxable income = $11 380 + $1617= $12 997

Find the amount of tax payable by subtracting the total rebates from the total tax on the taxable income.

Tax payable= total tax on taxable income − rebate= $12 997 − $1220= $11 777

Find the amount of the refund due. Refund due = instalments − tax payable= $13 466 − $11 777= $1689

Write the answer. Shanita is due a $1689 refund.

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Income tax

1 Using the given scale of rates, calculate the amount of tax payable on each of thefollowing incomes.a $5900 b $12 200 c $20 550 d $20 700e $29 365 f $33 640 g $38 710 h $45 500i $59 320 j $100 000

2The 1998–99 financial year is:

3Deductions are subtracted from:

4Which one of the following statements is true?A Rebates are subtracted from the gross employment income.B Rebates are subtracted before the deductions.C A rebate is equivalent to the refund due.D Rebates reduce the amount of tax payable.E A donation to an approved charity can be claimed as a rebate.

5 In a particular financial year Julie earned a salary of $29 000; she also received $400 individends from her shares and $80 interest on her savings account. Julie’s allowabledeductions are her work-related training course, which cost her $900, and her unionmembership fee of $220. She can also claim a rebate of $1140. If during the year Juliehas paid $5882 tax in monthly instalments, what is the amount of the refund due backto her?

6 During a financial year Lea earned $22 000 salary and $7600 by buying and sellingshares. He is claiming a deduction of $1830 (payment of brokerage fees) and a rebateof $120. If he has already paid $3502 through the PAYE system, what is his balanceowing?

A 1 January 1998 to 1 January 1999 B 1 January 1998 to 31 December 1999C 1 July 1998 to 30 June 1999 D 1 June 1998 to 31 July 1999E 1 July 1998 to 1 July 1999

A taxable income B gross incomeC tax payable D tax on taxable incomeE none of the above

remember1. Taxable income = Gross income − Deductions2. Tax payable = Total tax on taxable income − Rebates3. Balance owing = Tax payable − Instalments4. Refund due = Instalments − Tax payable

remember

2E

EXCEL

Spreadsheet

Incometax

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Tax rates and a GST1 Find the meaning of the following:

a GST b Negative gearing c Sales tax2 Investigate and describe in you own words the difference between a sales tax

and a GST.3 Use the Maths Quest Excel spreadsheet titled ‘Income tax’ to calculate the tax

payable on the incomes in Question 1 of Exercise 2E under the pre-July 2000 tax scale. Compare the tax payable for different levels of income under the pre-July 2000 rates and the post-July 2000 rates. Which income groups are advantaged most by the change in tax system?

EXCEL Spreadsheet

Incometax

Career profileBRETT COMER — Senior Management Accountant

Qualifications:Bachelor of Business (Accountancy) RMITAssociate of the Institute of Chartered Accountants in

AustraliaStudent member of the Chartered Institute of

Management Accountants (UK)

Employer:United Customer Management Solutions

Company website:http://www.unitedcms.com.au

ccounting is a challenging and exciting job. Alarge part of my role is preparing monthly

management reports with critical analysis of thebusiness’ financial results — the profit and loss, balancesheet and cashflow. The analysis involves comparingpercentage and dollar value differences between actualand budgeted or forecasted results.

I am also responsible for the coordination andpreparation of company consolidated budgets. These

budgets consist of the business expectations of the futurerevenue and expenses for the next year, next two years orlonger. Preparation of these budgets initially involvesreviewing actual financial results and using these, togetherwith future expectation, to calculate what next year’srevenue and expenses will be. At the simplest level in ourbusiness, one of the key drivers of our revenue andexpenses are our customer numbers. When budgeting wefirst predict, from our current customer numbers, what ourfuture customers will be. We then take these estimatedcustomer numbers and multiply by a per customer dollarvalue to arrive at estimated revenue or expenses.

As part of the budgeting process and in many areas ofbusiness, such as investment decisions, consideration ofthe effects of tax is required. One of the main tax issuesis the Goods and Services Tax (GST). This tax, in a verysimplified sense, is applied to all goods and services soldby businesses which have been charged with theresponsibility of collecting this tax. The current GST rateis 10%. As an accountant this requires me to considerGST when calculating the cost of our business’purchases (items now cost their purchase price plus 10%for GST) and also when charging our clients for services(what we bill our clients for our services plus 10% GST).

Questions1. What is the first thing that Brett does to

calculate the budget?2. How does the GST affect Brett’s

preparation of a budget?3. Where else could you study an Accountancy

degree besides RMIT?

A



BudgetingA budget is a table containing an estimate of income and expenditure. A personal (orfamily) budget can help you to:1. ensure that you do not spend more than you earn2. estimate the amount of money that you can save3. control your expenses and perhaps cut some of them in order to save more4. decide what you can and what you can’t afford.

A personal budget helps you to make various financial decisions. The expenses in thepersonal (or family) budget can be divided into two major categories: fixed (or unavoid-able) expenses and variable expenses. Fixed expenses may include rent or mortgage,medical insurance, car registration and other regular payments that must be paid andcan’t be varied. Variable expenses include food, entertainment, clothing and other itemsthat can be controlled or varied. To reduce some expenses in order to save more money,one would look into variable expenses.

A weekly, monthly or yearly budget can be prepared. Expenses may be weekly (suchas food), monthly (health insurance), quarterly (electricity bills) or yearly (car registration).Depending on the budget duration, all expenses should be converted to weekly, monthlyor yearly amounts. The following table of conversion is helpful in budget preparation.

It should be understood that budgets give only an approximation of the real-lifesituation, as they are based on estimates and do not include unexpected expenses.

Purpose Convert from Convert to Operation

Weekly budget Monthly cost Weekly cost × 12, then ÷ 52

Yearly cost Weekly cost ÷ 52

Monthly budget Weekly cost Monthly cost × 52, then ÷ 12

Yearly cost Monthly cost ÷ 12

Yearly budget Weekly cost Yearly cost × 52

Monthly cost Yearly cost × 12



The monthly budget of a single employed woman is shown below.

Use the table to resolve each of the following.a Calculate the total of the fixed expenses. Note that this woman views health insurance,

house contents insurance and car insurance as important expenses, and their regularpayments are fixed.

b Calculate the total of the variable expenses.c Calculate the amount available for saving.d Decide how soon this woman could afford a new stereo system valued at around $900.e If the woman wishes to take a vacation and travel to New Zealand (estimated cost

$3500), for how long does she have to save?f Suggest some possibilities for cutting expenses in order to save enough money for the

New Zealand holiday one month sooner.

Income Expenses

Salary after tax $2050Dividends from shares $23

Rent of 1-bedroom flat $520Electricity $70Phone $40Health insurance $30House contents insurance $10Car registration $27Car insurance $42Petrol $35Food $110Clothing $150Entertainment $150Sport $100Miscellaneous $40

Total: $2073 Total: $1324

THINK WRITE

a Identify the fixed expenses and add them up.

a Fixed expenses:Rent $520Health insurance $30House contents insurance $10Car registration $27Car insurance $42

Total = 520 + 30 + 10 + 27 + 42 = $629b Calculate the total of variable

expenses by subtracting fixed expenses from the total.

b Total of variable expenses= total expenses − total of fixed expenses= 1324 − 629= $695

c Calculate monthly savings by subtracting expenses from the income.

c Monthly savings= monthly income − monthly expenses= 2073 − 1324= $749

17WORKEDExample

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The Australian budgetBudgets can be prepared for individuals, families and small organisations. However, there is also a budget for each country. Investigate the last Australian budget.1 Who prepares the budget?2 What is the budget’s period?3 What is/are the source/s of income?4 What are the items in the expenditure section (that is, where does the money go)?5 Was there any deficit in the last budget?

THINK WRITE

d Compare the cost of the stereo with monthly savings.

d Cost of stereo system is around $900, which is just a bit more than monthly savings. Hence, it is possible for the woman to buy a new stereo in 2 months.

e Calculate the number of months required to save for the holiday.

e To save $3500 at the rate of $749 per month:

3500 ÷ 749 = 4.67 or approximately5 months

f Identify the number of months within which the money is to be saved.

f To save one month sooner than calculated in part e means 5 − 1 = 4 months

Calculate the amount required to be saved monthly.

Monthly savings needed = 3500 ÷ 4= $875

Calculate the extra amount which is to be saved per month.

Extra monthly savings needed= $875 − $749= $126

Suggest cuts in variable expenses. Cuts could be made as follows:Phone bills: cut from $40 to $30 gives $10Clothing: cut from $150 to $80 gives $70Entertainment: cut from $150 to $104 gives $46This gives 10 + 70 + 46 = $126, which is the required extra saving.

1

2

3

4

remember1. A budget is a table that contains an estimate of income and expenditure.2. The two major categories of expenses are fixed and variable expenses.3. Both budget and expenses can be calculated weekly, monthly, quarterly or

yearly. Depending on the budget, all expenses should be recalculated for the same time interval.

remember



Budgeting

1 The table below shows the monthly budget for a couple with one school-aged child.

Use the table to calculate the following:a the total of fixed expensesb the total of variable expensesc the total monthly savingsd the time needed for the family to save enough for a trip to Bali (estimated cost $3000).

2 List as many variable expenses as you can that are missing from the budget in question 1.

3 A university student who lives with her parents has the following expenses: she paysher parents $50 per week for board and food; a monthly ticket for public transport costsher $63; she spends on average $40 a month on books and stationery; her single healthinsurance premium is $24 a month; entertainment and snacks cost her about $55 amonth; the university enrolment fee takes $300 a year and she also needs clothes andaccessories which cost approximately $15 per week.a Prepare a monthly budget if the student’s income consists of Austudy (which is

$116 per week) plus birthday and Christmas presents ($250 a year).b Calculate the amount of money that she can save per month.

Income Expenses

Combined monthly salaryafter tax $3800

Mortgage repayments $1200Rates $75Building insurance $20Contents insurance $15Electricity $120Gas $25Telephone $50Car registration $35Car insurance $50Health insurance $60School fees $110Food $160Clothing $60Entertainment $100Sport $75Miscellaneous $120Household needs and repairs $20Petrol $55

Total: $3800 Total: $2350

2FWORKEDExample

17

EXCEL Spreadsheet

Budget



4 Using the figures in the table below, prepare an expenditure side of a weekly budget.

5 The student in question 3 is offered a part-time job in the university cafeteria, whereshe will be able to earn $66 per week.a Calculate her total monthly savings if she accepts this position.b Our student is considering moving in with her friends. By doing so she will save the

$50 per week that she is paying to her parents in board and food, but she will haveto pay $100 per month for her share of the rent. She will also have to contribute$45 per month for electricity and phone bills and $60 per week for food. With thenew job can the student afford to move out of home? Support your answer withappropriate calculations.

6 Prepare your personal monthly budget (or your family budget if you do not have anyincome). Are there any possibilities for cutting some of the expenses?

7 Members of a welfare group are discussing the budget for the next year. Their incomewill come from three sources: a government subsidy of $4200; annual membership feesof $25 per person and profits from the various events. They estimate that the auctionwill bring in $400, profits from the food stalls (at the picnic and the three local fairs)will be $230 each time and profits from the two concerts will yield about $1800 each.They also estimate that about 650 people will renew their membership. The money willbe spent as follows: rent of the premises at $500 a month; publishing the newsletter$240 per quarter; expenses of $180 associated with each Sunday School for 40 weeks ayear; electricity and phone bills at $220 a month; public liability and contents insur-ance, $1860 per year. Advertising will cost $30 per month and stationery $250 per year.After buying a new computer (for about $3500) and allowing $2000 for unexpectedexpenses, the rest of the money will be spent on charity.a Prepare a yearly budget for the welfare group.b Calculate the amount of money left to use for charity.c Express your answer to b as a percentage of the annual income.

Item Cost and period

Rent $600 per month

Food $90 per week

Electricity $420 per 3 months

Gas $40 per 2 months

Phone $360 per 3 months

Car registration $430 per year

Car insurance $500 per year

Health insurance $175 per 3 months

Contents insurance $125 per year

Clothes $100 per month

Entertainment $80 per month


C h a p t e r 2 A p p l i c a t i o n s o f a r i t h m e t i c

71

Cost of services

An important part of being able to prepare a personal budget is to understand howvarious services are charged.

The following questions are designed to help you investigate the cost of services, suchas electricity and gas charges, water and council rates and the costs of using a telephone.

Cost of services

1

Study the electricity bill shown below and answer the following questions.

a Who has issued this bill?b What is the total amount due and when should it be paid?c What does $60.00 CR mean?d Is the Winter Power Bonus added to the other charges or subtracted from them?e Did the average daily consumption of electricity increase compared to the same

period of time last year?f If the family wishes to prepare a weekly budget, what amount should it allocate to

the cost of electricity, based on this bill?g Complete the following statement: ‘The cost of the electricity is going to be

reduced from (date) by .’

2G


72

G e n e r a l M a t h e m a t i c s

2

The reverse side of the electricity bill shows how the amount due was calculated.

a

What is the time period for which this bill was issued?

b

How much energy (in kWh) was used by the household from 9/6/98 to 8/9/98?As you have discovered in question

1

, an electricity price reduction took place on1 July 1998. This is why you can see two sets of calculations. Each set in turn consistsof two parts: the cost of the first 1020 kWh used per quarter and the cost of electricityused above that amount.

c

What was the amount of electricity used in excess of 1020 kWh?

d

Complete this sentence: ‘Until 1 July 1998, the first 1020 kWh per quarter werecharged at the rate of $ per kWh and everything in excess of 1020 kWhwas charged at the rate of $ per kWh.’

e i

Calculate the decrease in rates in dollars.

ii

Hence find the percentage decrease.

iii

Does the percentage decrease that you’ve found correspond to that claimed bythe company (as seen on the front side of the bill)?

f

Explain how the subtotals of $338.27 and $333.47 were calculated.

g

Out of the ‘Old rates’ subtotal of $338.27, only $78.06 was billed to the customers.Likewise, out of the ‘New rates’ subtotal of $333.47 only a fraction ($256.52) wasbilled to the customers. Explain how these numbers were obtained.

h

What was the total service charge?

i i

Calculate the total of this bill if there had not been a price reduction forelectricity consumed from 1 July 1998 and the Winter Power Bonus.

ii

Hence state the amount of money saved by the household due to these changes.

3

Use the new rates for electricity supply in question

2

to calculate the quarterly cost ofthe following amounts of energy:

a

895 kWh

b

1300 kWh

c

2250 kWh



73

4

Study the gas bill below and answer the following questions.

a

What period of time does thisbill cover?

b

What is the total of this bill?

c

Express the amount of winterenergy concession as a per-centage of the total amount due.

d

As can be seen from the bargraph, the amount of gas usedin November is much higherthan in January or March.Explain this trend.


74


5

The reverse side of the gas bill shows how the amount due was calculated.

a

What is the gas consumption in cubic metres?

b

How many megajoules were used?

c

As can be seen from the bill, the price per megajoule depends on the amount used.Complete the following statement: ‘The customer is charged cents perMJ for the first MJ used in 2 months and c per MJ for theamount consumed in excess of 4000 MJ.’

d

What percentage of the total amount due does the supply charge constitute?

6

As was shown on the reverse side of the gas bill in question

5

, the number of mega-joules used is obtained by multiplying the consumption of gas in cubic metres(obtained by reading the gas meter) by the heating value and pressure factor.

Copy and complete the following table (the first row is copied from the bill inquestion

5

):.

7

Calculate the amount due for each amount of megajoules used as shown in theprevious question. Use the rates and the supply charge shown on the reverse side ofthe bill in question

5

.

Previous CurrentCubic metres

Heating value

Pressure factor MJ used

6204 6457 253 38.40 1.0109 9821

a

1020 1785 38.35 1.0007

b

2358 912 37.84 0.9998

c

3764 1156 1.0032 42 851

d

875 1543 37.98 25 368



75

8

The notice shown below was issued by SouthEast Water.

a

What are the components of the total charges?

b

What percentage of the total charge does each component represent?

c

What is the daily cost of water usage?

9

The reverse side of the water bill shows how the total amount due was calculated.

a

What was the amount of water (in litres) consumed by the household during the given period?

b

By what percentage was the metered water volume reduced to obtain sewage disposal volume?

c

Use the rates shown at right to calculate the amount due if the consecutive meter readings were 1978 kL and 2056 kL and the sewage disposal volume is taken as 56% of the metered water volume.


76


10

The first page of a telephone bill issued by Telstra is shown below.

a

Explain how the totalof this bill was calcu-lated from the com-ponents shown.

b

What percentage ofthe total bill does theservice charge rep-resent?

c

Is there any conces-sion available for thetelephone bill?

d

If the service chargeis always constant,what was the total ofthe previous bill,assuming that theFlexi-Plan was notyet introduced?

Telstra BillTelstra Corporation LimitedACN 051 775 556Account number

Opening Balance We received

93 � Flexi-Plan balance 8.40 cr

91 � Call charges to 22 May 116.51

92 � Service and equipment to 22 Aug 42.45

Total of this bill $150.56

Item Account Summary Your Reference 07 0033 0000 $

Balance Total of this bill

Bill number Date of issue Bill enquiries

Total amount payable

$150.55

15 Jun 99

Payment to be made by

T 000 123 123-2

$0.00

MS L REIDIE19 SHELL STREETOCENTIA 0000

$0.00 $0.00 $150.56

000 0000 034 24 May 99 13 20 00

Calling Patterns Compared With Last Bill

Local Calls up by $8.75

STD Calls up by $4.06

Calls to Mobiles up by $2.00

May-98 Nov-98 Feb-99 May-99

$200

$160

$120

$80

$40

$0

Same TimeLast year

Total Bill


C h a p t e r 2 A p p l i c a t i o n s o f a r i t h m e t i c 7711 Page 3 of the Telstra bill shown below.

a According to the service summary, how many metered calls were made and whatwas the cost of each call?

b What percentage of the service and equipment charge does the rent of the telephonerepresent?

c If a family buys a telephone valued at $89 and hence stops renting one fromTelstra, in how many months will the savings from not paying rental cover the costof the new phone?

d Use the itemised STD Calls section to find the afternoon rate for calling Marysville.e Study the Calls Direct to Mobiles itemised section and complete the following

statement: ‘Judging from the bill it is reasonable to assume that the off peak rate isapplied to any calls to mobiles made after pm.’

Local Call Saver 15

69 Plan fee 23 Feb to 22 May 0.00

71 Discount 8.40 cr

Plan balance $8.40 cr

Total Flexi-Plan balance $8.40 cr

Item Flexi-Plan Details $

Telephone Service 07 0033 0000

Flexi-Plan/Concession discounts $8.40 cr

Call charges

51 Metered calls 10 Feb to 06 May 404 units at $0.25 each 101.00

57 STD to 22 May 8 calls 6.51

58 Calls direct to Mobiles to 22 May 9 calls 9.00

Service and equipment

2 1 Telephone Handset Rental

Rent in advance 23 May to 22 Aug 2.50 7.50

1 1 Telephone Line Rental

Rent in advance 23 May to 22 Aug 11.65 34.95

Total for 07 0033 0000 $150.56

Item Service Summary $

STD CallsDate Time Place Number Rate Min:Sec $Telephone Service 07 0033 0000

27 02 Feb 02:54 pm Marysville 0359634 Afternoon 2:30 0.5725 02 Mar 08:13 pm Warburton 0358543 Economy 1:51 1.2826 23 Mar 06:54 pm Marysville 0359634 Economy 1:05 0.2324 02 Apr 03:32 pm Marysville 0359634 Economy 1:35 0.2821 03 Apr 01:04 pm Warburton 0358543 Afternoon 2:39 1.4822 02 May 10:01 pm Marysville 0359634 Economy 1:09 0.2419 07 May 02:17 pm Warburton 0358543 Economy 4:12 1.5420 09 May 10:34 am Marysville 0359634 Economy 7:42 0.89

STD CallsDate Time Place Number Rate Min:Sec $Telephone Service 03 9571 3949

45 02 Sep 08:13 pm Mobile 0411309 Off Peak 0:17 0.5046 03 Sep 04:39 pm Mobile 0411309 Peak 0:47 1.2548 06 Sep 12:33 pm Mobile 0411309 Peak 0:42 1.0047 10 Sep 02:59 pm Mobile 0411309 Peak 0:43 1.0050 07 Oct 01:33 pm Mobile 0411309 Peak 1:44 1.2544 08 Oct 12:35 pm Mobile 0411834 Peak 4:19 2.2549 21 Nov 08:37 am Mobile 0411309 Off Peak 0:07 0.5037 23 Feb 06:42 am Mobile 0411309 Peak 0:20 0.5043 03 Mar 07:36 am Mobile 0411690 Off Peak 0:36 0.75

Item

Item

STD Calls - Itemised $

Calls To Mobiles - Itemised $

Page 3



12 Below is a Rate Instalment Notice.

a Which council issued this notice?b Complete this statement: ‘The council rate is calculated for each

(calendar or financial) year.’c What is the yearly amount of council rates for this household if paid by equal

instalments?d If the payment of the instalment was made on the last day of October, what was

the interest charged to the nearest cent on the overdue rate?e Investigate what council rates are charged for and how they are calculated.

CECILY GRAHAM3 FLOWER RDCAULFIELD VIC 3162

WorkS

HEET 2.2



Credit cardsCredit cards allow you to purchase goods and services without paying for them on thespot. They can also be used for obtaining cash advances, paying bills and making pur-chases over the phone or on the Internet.

Common credit cards used in Australia include MasterCard, Visa, Bankcard, DinersClub and American Express.

When applying for a MasterCard, Visa or Bankcard, a customer is given a choice ofhaving either an interest-free period (usually up to 55 days) for a small annual fee (around$22), or no fee payable and no interest-free period (with the interest rate usually beinglower for the second option). Each cardholder is offered a certain limit of credit.

A monthly statement showing all transactions for the previous month is issued forevery cardholder. Upon receiving a monthly statement, a customer may decide to paythe bank in full by the due date indicated on the statement and hence not have to payany interest with an interest-free period card. Alternatively, the customer may choose tomake the minimum payment only. In this case interest will be charged on the unpaidbalance. The minimum payment is usually a certain percentage of the unpaid balanceor a certain fixed amount — whichever is larger. Variations in interest rates occur fromtime to time and cardholders are notified of these changes in advance.

Below are two extracts from Commonwealth Bank brochures outlining part of theircredit policy.

Source: Commonwealth Bank. Credit Cards — Check Out Our Credit Card Advantages. Valid as at 09/98.

Statement of the cost of credit: In accordance with section 158(1)(b) of the Consumer Credit Code, we make the following statement of the cost of credit for the purposes of section 140(3) of that Code:

As at 25 September 1998, the annual percentage rates for our standard credit cards are:MasterCard/Visa/Bankcard 15.10%(up to 55 interest free days with an annual fee)

MasterCard/Visa/Bankcard 13.95%(no interest free days with no annual fee)

Fees and charges are payable.

The above annual percentage rates may change.

Please call us on 13 2221 from 8am to 8pm, Monday to Friday, or ask at any branch for our up-to-date rates.



Source: Commonwealth Bank. Credit Cards — Conditions of Use — Valid as at 05/99.

Gold MasterCard, Visa GoldOn some Gold card accounts we may require a minimum payment each month whilst on others we may require a minimum payment once each six months.Monthly minimum paymentsIf a statement of your card account shows a closing balance of less than $25, the minimum payment is the closing balance.Otherwise, the minimum payment you must make is the greatest of:• the excess of the closing balance over the

credit limit on your card account;• 2.5% of the closing balance (rounded down

to the nearest dollar if the closing balance of your card account is $1,000 or more); or

• $25.

Find the minimum payment due for each of the following balances using the information supplied previously.a $23.40 b $1236.25 c $280.10 d $1560 with the credit limit being $1500

THINK WRITE

a Since the closing balance is under $25, it should be paid in full.

a As $23.40 < $25, the amount due = $23.40

b Since the closing balance is over $1000, calculate 2.5% of it.

b Amount due = 2.5% of $1236.25

= × 1236.25

= $30.91Round down to the nearest dollar. Rounded down to the nearest dollar, the

amount due is $30.c Since the closing balance is above $25

but below $1000, the minimum paymentis $25.

c $25 < $280.10 < $1000Therefore payment due = $25

d Since the closing balance is above $1000, calculate 2.5% of it and round down to the nearest dollar.

d 2.5% of $1560 = × 1560

= 39

Calculate the excess of the closing balance above the credit limit.

The excess of the closing balance above the credit limit = $1560 − $1500

= $60Select the greater of the two amounts. As $60 > $39, the amount due is $60.

1

2.5100---------

2

12.5100---------

2

3

18WORKEDExample


C h a p t e r 2 A p p l i c a t i o n s o f a r i t h m e t i c 81For the ‘No interest-free period’ option the interest charged on the outstanding amountof each purchase and cash advance is charged from the date of the purchase (or cashadvance) and until the purchase (or cash advance) is repaid in full. The same is true forcash advances, obtained with ‘55 days interest-free period’ cards. An extract from theCommonwealth Bank brochure explains the procedure.

Source: Commonwealth Bank. Credit Cards — Conditions of Use — Valid as at 05/99.

No interest-free days cardsWe charge interest on the outstanding amount of each purchase, permitted transaction and cash advance from the date the purchase, permitted transaction or cash advance is debited to your card account until you repay the purchase, permitted transaction or cash advance.We calculate interest for a statement period in three steps:• first, we average the outstanding balances over the

statement period;• then we multiply the average by the daily percentage

rate applying to your card account; and• finally, we multiply the result we get from the prior step

by the number of days in the statement period.The result we get from the last step is the amount of interest we charge to your card account in the statement period.

When do we debit interest?We debit your card account on the last day of each statement period with the interest we calculated during that statement period up to and including that last day.

For a ‘no interest-free period’ credit card, calculate the interest charged on the average outstanding daily balance of $220 with the interest percentage rate of 13.95% p.a. if the statement covers a 30-day period.THINK WRITE

Calculate the daily percentage rate. Daily % rate =

=

= 0.038 22

Calculate the daily interest charged on the outstanding balance.

Interest = 220 ×

= 0.084 08Find the interest charged over the 30-day period and round-off to the nearest cent.

Total interest for 30 days= 0.084 08 × 30= 2.522 47= 2.52 (to the nearest cent)

1annual % rate

365---------------------------------

13.95365

-------------

20.038 22

100--------------------

3

19WORKEDExample



For ‘up to 55 days interest free’ credit cards, no interest is charged if the amount is paidin full by the due date which is usually 25 days from the date of the statement. If the closingbalance is not repaid in full by the due date, the cardholder then temporarily loses theinterest-free option. The interest is usually charged on the outstanding balance from theday of the first purchase (that is, it is backdated!) until the outstanding balance is paid infull. Any purchases made before the balance is fully repaid are also added to the total. Sobasically if the balance is not paid in full by the due date, the card is effectively a ‘nointerest-free period’ card, but with the higher interest rate being applied.

For a ‘55 days interest free’ credit card, calculate the amount of interest charged on an outstanding balance of $450 which was repaid 10 days after the due date, given that the first purchase was made on the first day of the 30-day statement period and the annual percentage interest rate was 15%. (Assume that no other purchases were made after the end of the statement.)

THINK WRITE

Calculate the length of time for which the interest is charged, keeping in mind that it is charged from the date of the first purchase and until the balance was repaid.

The number of days from the first purchase to the last day of statement = 30 (as the purchase was made on the first day and the period covers 30 days).The number of days from the date of the state-ment to the due date = 25.The number of days from the due date to the date of actual payment = 10.Total days = 30 + 25 + 10 = 65

Calculate the daily interest rate. Daily interest rate =

= 0.041 096

Find the interest charged on $450 over the period of 65 days and round-off to the nearest cent.

Interest = $450 × × 65

= $12.02

1

215%365-----------

30.041 096

100-----------------------

20WORKEDExample

remember1. The two options for Visa, MasterCard or Bankcard are:

(a) no annual fee and no interest-free period(b) an annual fee and a specific interest-free period.

2. The bank requires a minimum monthly payment which is usually the greater of a certain fixed amount or a specific percentage of the closing balance.

3. For all transactions made with a ‘no interest-free period’ card and for cash advances obtained with an ‘up to 55 days interest-free period’ credit card, the interest is calculated from the date of the first purchase.

4. For interest-free period credit cards, if the closing balance is paid in full by the due date indicated on the statement, no interest is incurred. Otherwise, interest is charged until the balance is repaid.

remember



Credit cards

1 The XYZ Bank requires the minimum payment off credit card balances to be:(a) the closing balance if it is under $25, or (b) the greatest of:

ii(i) the excess of the closing balance over the credit limit, ori(ii) 2.5% of the closing balance (rounded down to the nearest dollar), or(iii) $25.

Calculate the minimum payments on each of the following balances.a $17.50 b $26.49c $147.42 d $785.00e $1326.12 f $2312.58g $3489.60 h $1954.00 with a limit of $1900i $2320.48 with a limit of $2300 j $3080.00 with a limit of $3000

2 For a ‘no interest-free period’ credit card, calculate the interest charged on an averageoutstanding daily balance of $430 with a percentage interest rate of 14.01% p.a. if thestatement covers a 30-day period.

3 An up to 55 days interest free’ credit card holder used his card on 15 March to obtain acash advance of $365, which he repaid on 20 March. What was the amount of interestcharged on the cash advance at the rate of 15.01% p.a.?

4 Here is some information extracted from a monthly credit card statement:Statement begins: 1 April; Statement ends: 30 April; Payment due date: 25 MayDate Transaction Details Amount03 Apr HBA 180.0008 Apr Myer Chadstone 89.0016 Apr Optus 252.2522 Apr Coles Glen Huntleigh 112.9030 Apr Sportsgirl City 69.95a Calculate the interest-free period for each of the above transactions.b Complete the following sentence: ‘To make a full use of “up to 55 days interest-free”

option, the purchases should be made at the of the statement period.’

5 For a ‘55 days interest-free’ credit card, calculate the amount of interest charged on anoutstanding balance of $625 which was repaid a fortnight after the due date, given thatthe first purchase was made on the first day of the 30-day period and the annualpercentage rate was 14.98%. (Assume that no other purchases were made after the endof the statement in question.)

6 Study the statement for the ‘55 days interest-free period’ credit card which follows andanswer these questions.a What is the length of the period of time covered by this statement?b What was the closing balance of the previous statement?c Did the payment of the previous statement balance incur any interest charges?

Explain your answer.d Explain how the minimum amount due was calculated.e Explain how the amount of available credit was calculated.

2HWORKEDExample

18

WORKEDExample

19

WORKEDExample

20



7 The closing balance for the statement in question 6 was repaid in full on 20 June. Findthe amount of interest charged, if:a no further purchases were made until that dateb a further $300 was spent on 31 May.

Date

29 Apr

30 Apr

3 May

8 Apr

4 May

4 May

5 May

Reference Number

74900052MENTAJ

89101123XYZ

FIZ3456ROGERDUTY

72345670J4U00ABCD

12345678GOODILUV

789108ABCD1234

7654321XYZWRST

MS ILA NORMAN32 BROWN STREETCAULFIELD VIC 3162

MS ILA NORMAN

Transaction Details

Payment received - thank you

Interest charges

Goverment duties - last month

Travel Wide Melbau

Books & Musical World Carlton AU

SCUD Shoes Noble Park AU

Groovy Music Nth Mlbourne AU

Amount (A) $

22.10-

2.50

0.32

296.18

47.00

128.00

176.00

2345 6789 1234 9299

1 OF 1

2345 6789 1234 9299

$0.00 $22.10 + $650.00 - $22.10 + $650.00Overdue/Over limit Opening Balance

Available credit $350Credit limit $1000

Daily percentage rate .04136Annual percentage rate 15.100

New charges Payments/refunds Closing Balance

SPECIMEN STATEMENT ONLY – USED FOR PURPOSE OF ILLUSTRATION. Valid as At 05/99.


workedexample - iinetmembers.ozemail.com.au › ~rdunlop › coplandmain › canb... · 9 a real...

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