1. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 1 Chapter 6 Payroll Section 1 Gross Earnings: Wages and Salaries

2. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 2 Understand the Methods of Calculating Gross Earnings for Salaries and Wages As shown in the Numbers in the News, on the next slide, many employees live from paycheck to paycheck. Understanding how net pay is calculated can eliminate unwanted surprises.

3. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 3

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5. 5 Find Overtime Earnings for Over 40 Hours of Work per Week Fair Labor Standards Establishes a work week of 40 hours Sets minimum hourly wage Overtime wage for all hours over 40 hours per workweek Time-and-a-half rate (1½ or 1.5 times the normal rate

6. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 6 Overtime Gross Earnings Gross Earnings = Earnings at regular rate + Earnings at time-and-a- half rate

7. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 7 Example Complete the following payroll ledger.

8. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 8 Example First, find the total number of hours worked by each person. Lanier: 6 + 9 + 8.25 + 8 + 9 + 4.5 = 44.75 Morse: 10 + 6.75 + 9 + 6.25 + 10 + 4.25 = 46.25 Find Gross Earnings at regular rate: Lanier: 40 × $8.30 = $332 Morse: 40 × $9.48 = $379.20

9. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 9 Example Find overtime hours: Lanier: 44.75 – 40 = 4.75 overtime hours Morse: 46.25 – 40 = 6.25 overtime hours Find the time-and-a-half rate: Lanier: 1.5 × $8.30 = $12.45 Morse: 1.5 × $9.48 = $14.22 Find overtime earnings: Lanier: 4.75 h × $12.45 per hr = $59.14 Morse: 6.25 h × $14.22 per hr = $88.88

10. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 10 Example The payroll ledger can now be completed.

11. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 11 Use Overtime Premium Method of Calculating Gross Earnings Straight-time earnings: total hours worked × regular rate + Overtime premium: overtime hours worked × ½ regular rate = Gross Earnings

12. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 12 Example This week, Holly Kelly worked 40 regular hours and 12 overtime hours. Her regular rate of pay is $17.40 per hour. Find her total gross pay, using the overtime premium method.

13. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 13 Example 3 Kelly’s total hours are 40 + 12 = 52, and her overtime premium rate is.5 × $17.40 = $8.70. Holly Kelly’s gross earnings are $1009.20. 52 hours × $17.40 = $904.80 12 overtime hours × $8.70 = $104.40 $1009.20

14. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 14 Find Overtime Earnings for Over 8 Hours of Work per Day Daily Overtime Some companies pay the time-and-a-half rate for all time worked over 8 hours in any one day no matter how many hours are worked in a week.

15. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 15 Find Equivalent Earnings for Different Pay Periods The second common method of finding gross earnings uses a salary. A fixed amount given as so much per pay period (time between paychecks). Common pay periods are weekly, biweekly, semimonthly, and monthly.

16. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 16 Example You are a career counselor and want to compare the earnings of four clients you have helped to find jobs. Scott Perrine receives a weekly salary of $546, Tonya McCarley receives a biweekly salary of $1686, Julie Circle receives a semimonthly salary of $736, and Bill Leonard receives a monthly salary of $1818. For each worker, find the following: (a) earnings per year, (b) earnings per month, and (c) earnings per week.

17. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 17 Example Scott Perine: (a) $546 × 52 = $28,392 per year (b) $28,392 ÷ 12 = $2366 per month (c) $546 per week Tonya McCarley: (a) $1686 × 26 = $43,836 per year (b) $43,836 ÷ 12 = $3653 per month (c) $1686 ÷ 2 = $843 per week

18. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 18 Example Julie Circle: (a) $736 × 24 = $17,664 per year (b) $736 × 2 = $1472 per month (c) $17,664 ÷ 52 = $339.69 per week Bill Leonard: (a) $1818 × 12 = $21,816 per year (b) $1818 per month (c) $21,816 ÷ 52 = $419.54 per week

19. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 19 Find Overtime for Salaried Employees Fair Labor Standards Act requires that employees in certain salaried positions receive additional compensation for overtime. Similar to a wage earner, such salaried workers are paid time and a half for all hours worked over 40 hours per week.

20. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 20 Example Monica Gonzales earns $936 a week as an assistant to the vice president of a community bank. A normal workweek for her is 40 hours. Find her gross earnings if she works 45 hours one week and is paid time and a half for everything over 40 hours.

21. Copyright © 2015, 2011, and 2007 Pearson Education, Inc. 21 Example Hourly equivalent to salary = Overtime rate = 1½ × $23.40 = $35.10 Find gross earnings as follows. Regular wages $936.00 Overtime wages 5 × $35.10 = $175.50 Gross Earnings $1111.50