1. BUS250 Business Mathematics Seminar 5

2. Try these examples Find the gross earnings for: Carolyn, who earns $15,000 a year and is paid weekly. $288.46 Martha, who earns $48,000 a year and is paid biweekly. $1,846.15 Bill, who earns $35,000 a year and is paid semimonthly. $1,458.33

3. 10.1.2 Find the Gross Pay Per Week Based on Hourly Wages 1.Find the regular pay by multiplying the number of hours (40 or less) by the hourly wage. 2.Find the overtime pay by multiplying the hourly rate by the overtime rate (usually 1.5) and then multiply that rate by the number of hours that exceed 40. 3.Add the figures from steps 1 and 2.

4. Here’s an example Theresa worked 45 hours last week. If her hourly rate is $10.50 per hour, find her total gross earnings. Multiply 40 x $10.50 = $420.00 To calculate the overtime amount, multiply her hourly rate by 1.5: $10.50 x 1.5 = $15.75 Multiply the overtime rate ($15.75) x the number of overtime hours (5): $15.75 x 5 = $78.75 Add the regular and overtime pay: $498.75

5. Try these examples The regular hourly rate in the production department for these employees is $6.50, and overtime is paid at 1.5. Find the weekly earnings for these employees: Marcus worked 48 hours. $338 Allison worked 44 hours. $299

6. Here’s an example Jorge assembles microchip boards. He is paid on a differential piecework basis. Rates are as follows: –From 1-100$1.32 per board –From 101-300$1.42 per board –301 and over$1.58 per board If he assembles 317 boards how much will he earn?

7. Jorge’s earnings 100 x $1.32 = $132.00 101 to 300 = 200 x $1.42=$284.00 17 x $1.58 =$ 26.86 Total earnings:$442.86

8. 10.1.4 Find the Gross Pay Per Paycheck Based on Commission Commission: earnings based on sales. Straight commission: entire pay based on sales. Salary plus commission: a set amount of pay plus an additional amount based on sales. Commission rate: percent of sales that are eligible for a commission. Quota: a minimum amount of sales that is required before a commission is applicable.

9. Here’s an example Marisa is a restaurant supplies salesperson and receives 6% of her total sales as commission. Her sales totaled $12,000 during a given week. Find her gross earnings. Use the formula: P = R x B to find her earnings. P = 0.06 x $12,000 = $720 Marisa’s earnings equal $720

10. Try this example Melanie Brooks works for a cosmetics company and earns $200 a week in salary plus 30% commission on all sales over $500. If she had sales of $1,250 last week, how much were her total earnings? Her salary would be $200 plus any applicable commission. The commission would be calculated at 30% on $750 in sales or $225. Add this amount to her base salary and the total is $425.

11. Income tax: local, state of federal tax paid on one’s income. Federal tax withholding: the required amount to be withheld from a person’s pay to be paid to the federal government. Tax-filing status: status based on whether the employee is married, single, or head of household; determines the tax rate. W-4 form: required form to be held by the employer for determining the amount of federal tax to be withheld. Key Terms

12. 10.2.1 Find Federal Tax Withholding per Paycheck Using IRS Tax Tables To calculate federal withholding tax using the IRS tax tables, an employer must know: –The employee’s filing status (single, married or head of household) –The number of withholding allowances the employee claims –The type of pay period –The employee’s adjusted gross income

13. Adjusted gross income Allowable adjustments to the gross income, such as qualifying IRAs, tax-sheltered annuities, 401Ks, or employee-sponsored childcare or medical plans. Tax-free or tax-deferred benefits

14. 10.2.3 Find Social Security and Medicare Tax per Paycheck Find the amount of the earnings subject to be taxed; adjusted gross income less than or equal to $97,500 annually. Social Security taxes are currently capped at $97,500. (This threshold can change.) Multiply the taxable amount by 6.2% or 0.062 to find the amount in Social Security taxes.

15. Find the Medicare tax amount The Medicare tax amount is calculated at 1.45% (or 0.0145) of the adjusted gross income. Unlike Social Security, there is no cap on income level. Example: Joe’s gross pay is $1,654. How much does he owe in Social Security and Medicare taxes? SS = $102.55 and Medicare = $23.98

16. Employers pay an equal amount Employers also pay 6.2% for Social Security and 1.45% for Medicare of each employee’s gross pay. A self-employed person must pay the equivalent of both amounts: 12.4% in Social Security and 2.9% in Medicare.

17. 10.3.2 Find the Employer’s SUTA Tax and FUTA Tax for a Quarter FUTA (Federal State Unemployment Tax Act) and SUTA (State Unemployment tax) are paid entirely by the employer and do not affect the employee’s paycheck. FUTA is currently 6.2% of the first $7,000 earned by an employee in a year minus any amount the employer has paid in SUTA (up to 5.4%). FUTA and SUTA are paid on a quarterly basis.

18. FUTA and SUTA The amount a company pays in SUTA will depend on a company’s unemployment history. If an employer pays 5.4% in SUTA, then the company will pay 0.8% in FUTA. If the amount owed in FUTA in a given quarter is less than $100, then no payment is made that quarter and the amount is added to the following quarter.