1. Cambridge University Press  G K Powers 2013 1. Earning and managing money Study guide 1

2. Cambridge University Press  G K Powers 2013 Salary and wages  Salary is a payment for a year’s work which is then divided into equal monthly, fortnightly or weekly payments.  1 year = 52 weeks  1 year = 26 fortnights  1 year = 12 months  Wage is a payment for work that is calculated on an hourly basis. HSC Hint – Be careful converting time periods. Most months have more than 28 days (4 weeks). 2

3. Cambridge University Press  G K Powers 2013 Overtime and special allowances  Overtime is work beyond the normal working day.  Time-and-a-half rate = normal rate × 1.5  Double time rate = normal rate × 2  Casual rate is set amount paid for each hour’s work.  Special allowances are given to employees if they work under difficult or dangerous conditions such as wet weather, extreme temperatures, confined spaces or isolated areas. HSC Hint – Check overtime hours and normal hours add to the total hours worked in the week. 3

4. Cambridge University Press  G K Powers 2013 Annual leave loading and bonuses  Annual leave or holiday loading is the payment for going on holidays. Holiday loading = 17 % × normal weekly pay × weeks leave.  Bonus is an extra payment or gift earned as a reward. HSC Hint – Add the holiday loading to the normal pay to determine the pay for the holiday. 4

5. Cambridge University Press  G K Powers 2013 Commission Commission is the percentage of the value of the goods sold. Advantages  Higher sales increase the income.  May receive a small payment (retainer) plus the commission. Disadvantages  Income may vary each week.  Competition for customers is usually high. HSC Hint – Commissions can be calculated on a sliding scale. Check your sales are correct. 5

6. Cambridge University Press  G K Powers 2013 Piecework, royalties and government income  Piecework is payment for work completed. Piecework = Number of units of work × Amount paid per unit.  Royalty is a percentage of the goods sold or profit received.  Income received from government includes pensions, allowances or benefits. HSC Hint – Check units of measurement are consistent to ensure piecework payments are accurate. 6

7. Cambridge University Press  G K Powers 2013 Gross pay, net pay and deductions  Gross pay is the total of the employee’s pay including allowances, overtime pay, commissions and bonuses.  Deductions is the regular amount of money subtracted from a person’s wage or salary such as income tax.  Net pay equals gross pay minus deductions. Net pay = Gross pay − Deductions HSC Hint – Deductions and allowable deductions for taxation are different concepts. 7

8. Cambridge University Press  G K Powers 2013 Budgeting  Budgeting – balancing of income and expenses.  Budgets are created for a specified time such as weekly. Creating a budget 1.List all the income categories. 2.List all the expense categories. 3.Calculate the total of the income and expenses categories. 4.Balance the budget by modifying the categories or by entering a balance category. HSC Hint – Check all calculations in the budget are for the same specified time. 8