1. Gross Pay for Various Compensation Methods CONT 110

2. Terms used Commission – Compensation in the form of a percentage of total sales Piecework – Compensation based on the number of pieces completed Piece Rate – The amount paid for each piece produced Returned Merchandise – Goods returned due to defects, errors, or other reasons Salaried – An employee who is paid an annual amount which is divided over a given number of pay periods

3. Calculate compensation by salary Example: – Nadia Manez is an elementary school teacher working for the Lakemont Independent School District (LISD). Nadia signed a contract with LISD for an annual salary of $29,800, to be paid in 12 equal payments. What are Nadia’s monthly gross earnings? $29,800 / 12 = $2,483 (rounded)

4. Calculate compensation by salary plus commission net sales ( ). Commission is paid for net sales ( total sales – returned merchandise over a set quota ). Example – Gary Parsons salary is $500 per week. This week his total sales were $2,500, and $75 in merchandise was returned. His quota is set at $1,700. His commission is based on 6% of sales minus returned merchandise after he has met his quota. Calculate Gary’s gross earnings for the week.

5. Calculate compensation by salary plus commission CluesAction PlanSolve Gary’s sales were $2,500 and returns were $75 Subtract returns from total sales to determine net sales $2,500 - $75 = $2, 425 His quota is $1,700Subtract quota from net sales $2,425 - $1,700 = $725 He is paid 6% commission for net sales over $1,700 Multiply sales above quota by 6% to determine commission $725 * 0.06 = $43.50 Gross earnings is the sum of salary and commission Add weekly salary to sales commission $500 + $43.50 = $543.50 Conclusion Gary’s gross earnings were $543.50

6. Calculate compensation by piecework Example: – Toby Jennings works for a wholesale drug warehouse. He is compensated based on the number of lines he fills from an order form. His job is to read each order and, for each line, go to the proper bin in the warehouse and pull the number of items ordered on that line. He is paid a piece rate of $0.04 for each line he fills. Toby filled 15,193 lines items this pay period. 15,193 * $0.04 = $607.72