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30S Applied Math Mr. Knight – Killarney School Slide 1 Unit: Personal Finance Lesson: Earning an Income Earning an Income Learning Outcome B-1 PF-L1 Objectives: Perform basic calculations relating to income

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30S Applied Math Mr. Knight – Killarney School Slide 2 Unit: Personal Finance Lesson: Earning an Income The majority of people are paid an hourly wage according to a wage scale, and also according to factors such as overtime and length of employment with that employer. There are other methods of pay and, in some cases, a combination of more than one method of pay is possible. Theory - Methods of Pay

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30S Applied Math Mr. Knight – Killarney School Slide 3 Unit: Personal Finance Lesson: Earning an Income The following are some examples of ways people are paid: Hourly Wage - Workers are paid according to an hourly rate of pay. Examples: automotive mechanics, construction workers, student part-time jobs, manufacturing plant workers. In some cases, a higher rate is paid for overtime or weekend work. Salary - Income is given as an amount per year and the salary is paid in monthly, bi-weekly, or weekly installments. Examples: professional people such as engineers, accountants, teachers, and administrative people. Commission - Employees are paid a percentage of what they sell. This is common in the income of salespeople. Examples: Car sales, life insurance sales, and Autopac Insurance sales. Theory - Methods of Pay

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30S Applied Math Mr. Knight – Killarney School Slide 4 Unit: Personal Finance Lesson: Earning an Income More examples of ways people are paid: Contract - Employees get paid a sum upon the completion of some assigned task. (This type of pay may be divided into installments.) Examples: writers, artists, consultants Self-Employment - Business owner (entrepreneur) draws income from the proceeds of the business. Examples: farmers and owners of small businesses Theory - Methods of Pay

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30S Applied Math Mr. Knight – Killarney School Slide 5 Unit: Personal Finance Lesson: Earning an Income Gross Income is the income before any deductions. If you are paid by salary, contract, or in some cases through self-employment, your gross income is fixed, and varies only in the frequency of payment. For example, you may be paid weekly, bi-weekly, monthly, et cetera. If you are paid, in whole or in part, by tips and gratuities, your income is probably never exactly the same. In most cases, people who work in the service industry can expect about 10 percent of the value of their service in tips and gratuities Theory – Gross Income

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30S Applied Math Mr. Knight – Killarney School Slide 6 Unit: Personal Finance Lesson: Earning an Income Test Yourself

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30S Applied Math Mr. Knight – Killarney School Slide 7 Unit: Personal Finance Lesson: Earning an Income Test Yourself

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30S Applied Math Mr. Knight – Killarney School Slide 8 Unit: Personal Finance Lesson: Earning an Income Full-time hourly wage The most common method of earning income is through hourly wages. For example, a full-time employee receiving an hourly wage may work an eight-hour shift for five days a week, totalling 40 hours. Overtime If the full-time employee mentioned above works more than eight hours per day, the additional hours worked are considered as overtime. In some cases, if an employee works more than 40 hours per week, the additional hours are considered as overtime. For example, if Tim works 9 ½ hours one day, the additional 1 ½ hours is considered as overtime. Theory – Overtime

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30S Applied Math Mr. Knight – Killarney School Slide 9 Unit: Personal Finance Lesson: Earning an Income There are some exceptions to the overtime rule. Sometimes workers such as nurses, firemen, and some employees in manufacturing and processing plants are contracted to work shifts that are more than eight hours. Time Off For example, some employees will work four 12-hour shifts and then get four days off. However, if they were to work more than 12 hours in a day, or work on one of their days off, it would be considered as overtime. Theory – Overtime

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30S Applied Math Mr. Knight – Killarney School Slide 10 Unit: Personal Finance Lesson: Earning an Income Overtime rates include: 1.5 (time and a half) 2 (double time) 2.5 (double time and a half) The 2.5 rate is commonly used for working a statutory holiday such as Christmas, New Year's Day, and Victoria Day. Shift Premium - Many employers will also pay extra for working afternoons, evening, or weekend shifts. For example, nurses refer to extra pay for working a statuary holiday as "Holiday Premium." Bonus - Some production companies will pay bonuses for extra production. Theory – Overtime

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30S Applied Math Mr. Knight – Killarney School Slide 11 Unit: Personal Finance Lesson: Earning an Income Test Yourself Calculate Kevin’s Gross Income

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30S Applied Math Mr. Knight – Killarney School Slide 12 Unit: Personal Finance Lesson: Earning an Income Spreadsheets are useful in the calculation of gross income. If a spreadsheet is designed well, calculations can be done quickly and consistently. The most important concept in using a spreadsheet is to design the worksheet so that appropriate formulas are entered in cells using cell addresses. After setting up the spreadsheet in this way, it can be used as a template. The hourly wage and the number of regular and overtime hours are entered and the spreadsheet will then calculate the gross pay automatically based on the formulas in the template. Theory – Spreadsheets

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30S Applied Math Mr. Knight – Killarney School Slide 13 Unit: Personal Finance Lesson: Earning an Income Theory – Spreadsheets What are the formulas in this spreadsheet?

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30S Applied Math Mr. Knight – Killarney School Slide 14 Unit: Personal Finance Lesson: Earning an Income Theory – Decision Making Sometimes we want the spreadsheet to perform a decision-making function. The following are some examples where this type of function is applied. Calculate the commission based on the total sales Calculate the bonus based on the quantity of product that is produced Calculate the gross pay A car salesperson is paid a commission of 15 percent for all sales up to $100,000 plus an additional of 5 percent for sales over $100,000. What is the commission if her sales are $150,000? A decision- making function can be applied in this case.

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30S Applied Math Mr. Knight – Killarney School Slide 15 Unit: Personal Finance Lesson: Earning an Income Theory – Decision Making One of the decision-making functions in a spreadsheet is the IF function. Normally, the IF function is used together with the comparison operator. Table A lists the valid comparison operators. Table A Comparison Operator Meaning =Equal to >Greater than

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30S Applied Math Mr. Knight – Killarney School Slide 16 Unit: Personal Finance Lesson: Earning an Income Theory – IF function The general form of the IF function contains three parts: logical_test, the value_if_true, and the value_if_false. They are separated by a comma. You must have an equal sign before the IF and enclose the three parts using brackets. A logical_test is made up of two expressions and a comparison operator. An expression can be a value, a cell address, or in some cases a text or another expression. The value_if_true is the value you want to display in the cell when the logical_test is "true." Likewise, the value_if_false is the value you want to display in the cell when the logical_test is "false."

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30S Applied Math Mr. Knight – Killarney School Slide 17 Unit: Personal Finance Lesson: Earning an Income Theory – IF function =IF(A1=B1,0,20) If the value in cell A1 is equal to B1, then 0 (zero) will be displayed in the cell. Otherwise, the logical_test is "false," and the value 20 will be displayed. =IF(B2=90,SUM(B4:B10),"") If cell B2 is equal to 90, the sum of the values of B4 to B10 will be displayed in the cell. Otherwise, the logical_test is "false," and the value_if_false is empty. In this case, NO text will be displayed in the cell. =IF(A1>B1,C2,"None") If the value of cell A1 is greater than cell B1, the value in cell C2 will be displayed. Otherwise, the text None will be displayed.

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30S Applied Math Mr. Knight – Killarney School Slide 18 Unit: Personal Finance Lesson: Earning an Income Theory – IF function Planning Question 10 (IF Function) Prepare a spreadsheet that will automatically calculate the gross pay of an individual given the hours worked, the rate of pay, and the point where the worker begins earning overtime. For example, calculate the gross pay of an individual who worked 52 hours in a week at $16.00 per hour. Overtime is paid after 40 hours in a week and the overtime rate is 1.5 times the regular rate of pay.

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