Calculating Gross Pay (Examples)



Name: All About Pay & Paychecks: PART 1 Date: 4/14/2020The road to independence and adulthood often begins with some financial freedom. Many young adults find that having a job provides them with the opportunity to earn disposable income.Disposable Income is the amount of money remaining after taxes have been deducted that a person can save or spend as he or she wishes. Most young adult workers are paid through an hourly wage. The hourly wage is a specific rate of money per hour worked that is paid by an employer. The amount of a worker’s wages varies based on the employer as well as the worker’s experience and skill level. Wages are commonly paid by the hour, by the day, or by the job. An example of being paid by the job is a landscape worker who is paid only after the landscape project is completed, regardless of the hours worked.A benefit that hourly workers often enjoy is overtime. Overtime is time worked beyond an employee’s regular hours. The Fair Labor Standards Act established that overtime pay is at a rate not less than one and one-half times the regular rate of pay and is required for hours worked over 40 per workweek.Some employees are paid a salary instead of hourly wages. A salary is a fixed amount of money paid to an employee to do a job. Salaried workers do not receive overtime pay because they are paid a specific amount to do a job regardless of how many hours per week they work. Many salaried employees work more than a typical 40 hour week. A benefit of receiving a salary is that employees receive the same amount each paycheck.Most salaries are stated as an annual (yearly) amount, such as $32,000 per year. Employers divide the yearly amount by the number of pay periods. A pay period is the number of days an employee works and is paid for each paycheck. A Payday is the day a person is paid.Pay periods vary depending on employers. The four most common types of pay periods are:Weekly – workers are paid once per week with 52 pay periods per yearBi-Weekly - workers are paid every 2-weeks with 26 pay periods per yearSemi-Monthly – workers are paid twice per month with 24 pay periods per yearMonthly – workers are paid once per month with 12 pay periods per yearGross pay, the amount of money earned before any deductions are subtracted, can be calculated using a person’s hourly wage amount or salary amount, hours worked, and pay period. The examples on the next page explain how to calculate gross pay.Calculating Gross Pay (Examples)Example 1: Olivia works at an auto parts store and makes $8.00/hour. Last week, she worked 40 regular hours and 2 hours overtime. Her gross pay is calculated below: Find Olivia’s overtime pay rate: $8.00 x 1.5 = $12.00/hour Regular hours: 40 hours x $8.00 = $320.00 Overtime hours: 2 hours x $12.00 =$24.00 Olivia’s Gross Pay for last week = $344.00 Example 2: Terry works as an accountant and makes $46,000/year. He is paid semi-monthly. Last week, he worked 40 regular hours and 9 hours overtime.Calculating Gross Pay for Salaried Employees:1. Find pay amount for semi-monthly pay: $46,000 24 months = $1,916.67/semi-month (12 months/year, 2 paychecks per month) Terry’s overtime pay rate: $0 - He is salaried, so he receives no overtime. So Terry’s Gross Pay = $1,916.67/paycheckExample 3: Chris works at a fast food restaurant and makes $8.15/hour and is eligible for overtime pay. Last week, he worked a total of 51 hours.Chris’s hours: 51 total hours – 40 regular hours = 11 overtime hours. Chris’s overtime pay rate: $8.15 x 1.5 = $12.23/hour for overtime11 overtime hours x $12.23/hour = $134.53 Regular hours: 40 hours x $8.15= $326.00 Chris’s Gross Pay = $460.53 Refer to the text above on pages 1-2 to answer each question below.Explain the difference between an hourly wage and a salary.What is the amount of a worker’s wages based on?What is the difference between a pay period and a payday?Name one positive and one negative feature about being paid a salary.What rule about overtime does the Fair Labor Standards Act establish?Match the terms:1. every 2-weeks with 26 pay periods per yearWeeklyBi-WeeklySemi-MonthlyMonthly2. once per month with 12 pay periods per year3. twice per month with 24 pay periods per year4. once per week with 52 pay periods per year Calculating Gross PayDirections: Compute the gross pay based on the information given.1. Find Gross Pay this week. Pay Rate: $12.00/hour Regular hours worked: 40 Overtime hours worked: 10$2. Find Gross Pay this week.Pay Rate: $10.00/hourTotal hours worked last week: 45 $3. Find Gross Pay this week.Pay Rate: $20.00/hourTotal hours worked last week: 48$4. Find Gross Pay this week.Pay Rate: $8.00/hour Total hours worked last week: 50$5. Calculate Gross Pay per month. Annual Salary: $25,200/year$6. Calculate Gross Pay per semi-monthly rate.Annual Salary: $32,000/year$ ................
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