Gross Pay

Chapter 1
Gross Pay
1-1 Hourly Pay
Employees – People who work for others
Employer – The person or company and
employee works for.
Hourly Rate - a certain amount of money a
person is paid per hour they work.
EX: A worker at McDonald’s makes $7.35
and hour for every hour they work.
To figure hourly pay
Gross Pay – the total amount of money that an
employee is paid…this is also called total
Multiply # of hours worked by $ pay per hour
 Joe earns $8.90 per hour and works 26 hours
this week, his gross pay is
8.90 x 26 = $231.40
 Sue earns $14.60 per hour and works 22 ½
hours this week, her gross pay is
$14.60 x 22.5 = $328.50
Recording Hours Worked…
Many companies pay people based on a
quarter or a tenth of an hour…
For example…if a company pays based on the
quarter or every 15 minutes, you might be docked a
quarter hour of pay if you are 3-4 minutes late.
For example…if a company pays based on the
tenth, you will be docked 1/10 if you are 3-4 minutes
late….you are docked based on 6 minute
What is meant by Overtime?
(Getting extra pay for extra work)
There are two methods to calculate overtime:
Any hours worked more than 40 hours a week.
Any hours over a stated amount of hours per day.
Most people are paid time and ½ for every
overtime hour worked.
To calculate overtime pay:
Pay per hour x 1.5 x number of overtime hours.
Then add overtime pay to regular pay.
To calculate gross pay with
overtime hours:
If the employee works more than 40 hours,
take 40 x $rate per hour to find regular pay.
Calculate OT hours = Take number of hours
worked – 40
Calculate OT rate = $rate per hour x 1.5
Multiply the OT rate x OT hours = OT pay
Add OT pay to regular pay = gross pay
Try these…
Tom worked 45 hours and earns $10.00 an
hour. How much is his gross pay for the
40 x $10.00 = $400 …this is his regular pay
45 – 40 = 5 OT hours
$10.00 x 1.5 = $15.00 which is his OT rate
$15.00 x 5 = $75.00…this is his OT pay
His gross pay is $400 + $75.00 = $475.00
$ 624.00
$ 1,160.00
Try these…
$ 579.00
Sue worked 48 hours and earns $12.00 an
hour. How much is her gross pay for the
Joel worked 52 hours and earns $20.00 an
hour. How much is his gross pay for the
Lori worked 45 ½ hours and earns $12.00 an
hour. How much is her gross pay for the
Overtime is calculated based on
hours worked in 2 ways…
Hours worked over 40 hours a week.
Hours worked over a stated amount (usually
8) a day.
This is paid EVEN if the total hours worked in a
week is less than 40…it is based on a daily
number of hours worked.
Example on #2 option
Karen gets paid $12.40 and hour plus time
and ½ for any hours worked more than 8 a
Last week she worked the following:
M – 6, T – 12, W – 8, TH – 8, F – 10
What was her gross pay?
Reg Hours = 38 Reg Pay = 38 x $12.40 = $471.20
OT Hours = 6
OT Pay =6 x 1.5 x $12.40 = $111.60
Gross Pay = $471.20 + $111.60 = $582.80
1-2 Salaried Employees
Salaried employees are paid a fixed amount of
money for each time period….their paycheck
doesn’t change.
Ex: Tom is paid $400 per week, how much
does Tom make in a month?
$400 * 4 = $1,600
1-2 Salary
Salary – When people get paid a stated amount
per year and this is paid in equal amounts per
 Doesn’t matter how many hours you work per
 Security of getting a good paycheck.
Please get out the following:
 Textbook
 2
 Whiteboard
 Expo marker
 Rag for board
 Notebook, calculator, pen/pencil
Be Ready….
There will be a quiz
tomorrow on what we
have learned so far this
1-3 Commission – there
are 3 types
Commission – is a fee or percentage of interest
paid for sales made. A commission may be
an amount for each item sold, or it may be a
percent of the dollar value of sales.
This is usually paid to salespeople as an
incentive to sell more.
1. Straight Commission
Straight commission – when sales people are
ONLY paid commission….they don’t get paid
a salary or wage per hour worked.
They can also be paid per item sold.
To Calculate =
%Rate of commission x quantity sold =
$commission pay
Straight Commission Examples…
EX. Earl Brown sells greeting cards and is paid a
straight commission of $0.75 on each box of cards
he sells. During March, he sold 145 boxes. Find
his commission.
$0.75 x 145 = $108.75
Straight Commission
EX. Terri Smith is paid a straight commission of 5%
on her sales. During September, her sales were
$32,000. What was her commission?
5% (OR .05) x $32,000 = $1,600.00
Get your white boards, a marker and do #A – C on
page 15..then show answers to Mrs. P.
2. Commission based on
a quota
Commission based on quota – The amount of sales a
salesperson must sell before they make any money
for commission. (Salespersons may also be paid a
salary in addition to commission.)
Ex: Clark is a salesperson that works on straight commission,
however, before he makes any money, he must reach a quota of
$3,000.00 in sales. Last month he sold $5,900.00 worth of goods
and gets paid a commission rate of 5%. What was his gross
$5,900.00 - $3,000.00 = $2,900.00
$2,900.00 x .05 = $ 145
Commission (con’t)
Brain Teaser…
Clark is a salesperson that works on straight
commission, however, before he makes any
money, he must reach a quota of $3,000.00 in
sales. Last month he sold $2,900.00 worth of
goods and gets paid a commission rate of 5%.
What was his gross income?
Salary plus commission….
Ex: Sue is a salesperson that works on salary plus 8% commission,
however, she has a quota to reach of $4,000.00 before she
makes any commission money. Last month she sold $10,000.00
in sales and she earns a salary of $500 a month. What was her
gross pay?
$10,000.00 - $4,000.00 = $6,000.00
$6,000.00 x .08 = $480 (commission)
$480 + $500 (salary) = $980.00
Using your white boards, # E & F on page 16 show answers to
Mrs. P..00
3. Graduated Commission
Graduated Commission - when salespersons
rate of commission increases as their sales
Ex: The rate may be 3% on the first $12,000 of sales, 4%
on the next $6,000 and sales over
$18,000…graduated commission can also be on the
number of units sold.
Look at Example # 4 on page 16..
Graduated Commission (con’t)
Bob works on a graduated commission listed below; he
sold $7,450.00 worth of goods this month, what was
his gross income?
3% on first $3,000
5% on second $2,000
7% on anything over $5,000
Page 5 #7 and 8 only- will be graded
2-2 Finding Gross Pay
Gross pay is earned by employees who are
paid by the hour and you calculate it by
multiplying the pay per hour by the number of
hours worked.
Ex: $8.50 x 20 hours worked = $170.00
Please get out…
Notebook w/dividers in it and paper
White board, marker and rag
In summary…commission is the
more you sell, the more money you
A. Sales x ___% = Commission
B. # of units sold x Money made per unit = $Commission
Solving for a Variable…
Typically we figure commission as
_________ X ________% = $ __________
com. Rate
com. Money
But what if you didn’t know com rate, but know
commission $?
Sue sold $56,000 and makes 5%, how much commission
did she make?
Sue made $2,800.00 in commission on $56,000 in sales,
what was her commission rate?
1-4 Other Wage Plans
1. Piece-rate employees - Some employees are
paid for each item or product successfully
 Ex: Tom makes $70 for each bike he makes, if
he makes 40 bikes, he makes $2,800.00, but
what if 2 of the bikes were defective?
 40-2 = 38
 38 * $70 = $2,660.00
 Look on page 21 #A and B
1-4 Other Wage Plans
2. Per Diem Employees – Per diem means per
day…some employees are paid for every day they
work….these are usually part time or temporary
employees…also known as temp help.
Ex: Shawn Taylor worked 5 days last week as a temp
computer operator. His per diem rate is $120. How
much money did Shawn make last week?
$120 x 5 = $600.00 gross pay for the week
Look at page 22 # C and #D
1-4 Other Wage Plans
3. Tip Employees – Some people get paid a tip
or gratuity for the service they provide. This is
usually a percentage of the bill or it can be a
dollar amount per item.
Ex: A waiter gets 15% of the bill
A skycap gets $1.00 per bag handled.
 Look at page 23 # E and #F
Look at page 24 and put on your white boards
the answers to questions #10 - 13
1-5 Finding Average Pay
Average – a single number used to represent a group
of numbers.
Simple Average – found by adding several numbers
and dividing the sum by the number of items
added….also called the mean.
Ex: Monica earned the following for the 3 days she
worked…$18, $58, $32. What was her average
earnings? $36.00
Look at page 27 # B and page 28 #C and #D
Grouping Data
A number or rate can occur more than once in a set of
data. When that happens, you can find the sum
quickly by grouping the common numbers.
Ex: The Smith Company has 8 employees. Five of the
employees earn $9 an hour, two earn $7 an hour, and
1 earns $13 an hour. What is the average amount per
our that these employees are paid?
 5*$9 = $45.00
 2*$7 = $14.00
 1*$13 = $13.00
 $72.00 / 8 = $9.00
Finding an Unknown Item…
If one item in a group or set of data is
unknown, you may have to find the unknown
item. Averages are used often in finding the
value of the unknown or missing item.
EX: Sue has a 90 average, if 3 of her 4 class
grades are 98, 89, 90, what is her 4th classes
90*4 = 360…..360 – 98-89-90=83
What is a Percent or Percentage?
A percentage is a mathematical way of expressing a
number. The number being expressed can be
considered a fraction, a part of a whole or an amount in
comparison to one hundred. The word "percent" is
short for the longer "percentage," and means "per one
hundred." Percent numbers are expressed in many
different ways and many forms, and can be computed
in a variety of ways. They are often accompanied by a
percentage sign.
What is a Percent or Percentage?
20% - a percent is a representation of a portion
of a whole…it is always based on an entire
amount of 100% of something.
 A percent is known as a ratio amount of
something else. For example, if you have 3%
of $100.00, you now have $3.00. To get this
number divide the percentage into the whole
number. So, for this equation, it would have
been 3/100.

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