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Earning Money - Contents

1.Salary2.Wages3.Commissio

n4.Royalties5.Piecework6.Overtime7.Addition &

Deductions8.Budgeting

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1A Salary (1/1)

Salary is paid on an annual basis.

•To calculate a monthly pay (÷12)

•To calculate a fortnightly pay (÷26)

•To calculate a weekly pay (÷52)

Example:John earns an annual salary of $75 000 p.a.

Calculate his monthly, fortnightly and weekly pay.

Monthly pay = 75 000 ÷ 12 =

$6450.00

Fortnightly pay = 75 000 ÷ 26 =

$2884.62

Weekly pay = 75 000 ÷ 52 =

$1442.31

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1B Wages (1/4)

Wages are paid on an hourly basis.

•To calculate wages we multiply the hourly rate by the number of hours.•To calculate hourly rate we divide the wage by the number of hours.

•To calculate number of hours we divide the wage by the hourly rate.

•An additional allowance is paid for working under unfavourable conditions.

•Casual rates are higher than normal rates of pay as no sick leave or holiday pay is usually paid.

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1B Wages (2/4)

To calculate wages we multiply the hourly rate by the number of

hours.Example 1:

How much is Bob’s wage if he earns $37/hour for 40 hours?

Pay =

37 Hourly Rate

x 40 Number of hours .

= $1480

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1B Wages (3/4)

To calculate hourly rate we divide the wage by the number of hours.

Example 2:

What is Bob’s hourly rate if he earns $1 480 for a 40 hour week?

Hourly rate =

1480 Wage

÷ 40 Number of hours.

= $37/hr

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1B Wages (4/4)

To calculate number of hours we divide the wage by the hourly rate.

Example 3:

How many hours does Bob’s need to work if he wants to earn $1 480 at $37/hour?

Hours =1480 Wage

÷ 37 Hourly Rate.

= 40 hours

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1C Commission (1/)

A commission is paid as a percentage of an employees sales.

A retainer is a fixed payment ,to keep a salesman, irrespective of sales.

Commision may be paid on a sliding scale.

E.g. 5% of the first $10 000 and 2.5% of the balance.

or

0% of the first $10 000 and 2.5% of the balance.

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1C Commission (2/)

Example 1:

Sarah earns a commission of 4% on sales of $50 000.What is her commission?

Commission = 0.04

4% as a decimal (Rate of commission)

x 50 000 Sales= $2 000

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1C Commission (3/)

Example 2:

John earns a commission of 5% on sales up to $150 000 and 2.5% of the balance.

What is his commission on sales of $400 000?

Commission = 0.05

5% as a decimal (Rate of commission)

x 150 000 Basic Sales

+ 0.025

2.5% as a decimal

x (400 000 – 150

000) Balance in

excess of $150

000

= $13 750

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1C Commission (4/)

Example 3:

Jane is paid a retainer of $500 and earns a commission of 3% on sales over $3 000.

What is her commission on sales of $5 600?

Earnings = 500 Retainer

+ 0.03 3% as a decimal

x (5 600 – 3 000)

Balance over $3

000

= $578

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1C Royalties (5/5)

A Royalty is a payment to someone who owns the copyright of a product.

It is usually paid as a percentage of sales in a similar way to a commission.

Example:An Author is paid 4% of all sales of his book. What are the Royalties on sales of $250 000?

Royalties = 0.04 x 250000 =$10 000

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1D Piecework (1/1)

Piecework is when a person gets paid for the amount of work completed.

Example:Bob is paid $27 for each model boat he

builds. How much is he paid if he builds 20 boats?

Piecework = 27 x 20 =

$540

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Overtime

Overtime is paid when you work more than the normal number of hours in a

week.

Overtime can be paid at:a) Time-and-a-half (x1.5)b) Double time (x 2)

Normal time is what you get paid for the standard number of hours in a working

week.

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Overtime

Pay = 40 x 30 x 1Hours

Pay Rate

Normal Time

Normal Time+ 2 x 30 x 1.5

Hours

Pay Rate

Time-and-a-half

Time-and-a-half+ 3 x 30 x 2

Hours

Pay Rate

Double Time

Double Time= $1 480

Example:Calculate the pay for a person who works 40

hours Normal Time, 2 hours at Time-and-a-half and 3 hours at Double time.

He is paid $30/hr for a normal week.

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Additions & Deductions from Gross Pay

Gross Payis the pay before any deductions are made.

Net Payis the pay after deductions are made.

Net Pay = Gross Pay - Deductions

Some deduction are calculated on an annual basis and deducted weekly (÷52) or fortnightly (÷26).

Some deduction are calculated as a percentage of gross earnings.

Holiday LoadingSome employees are paid 17 1/2% of their gross pay

for four weeks when they take their annual leave.

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Additions & Deductions from Gross Pay

Example 1:

Ben has a gross income of $500 per week. He has $125 deducted for tax and $75 for

superanuation.Calculate his Net income.

Net Income =Label

500 – 125 – 75

= $300 Calculation

Answer with units.

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Additions & Deductions from Gross Pay

Example 2:

Mary has annual union fees of $605.80. Calculate her fortnightly deduction.

Fortnightly Deduction =Label

605.8 ÷ 26

= $23.30Calculation

Answer with units.

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Additions & Deductions from Gross Pay

Example 3:

George earns $650 per week. He pays 4% as a contribution to superanuation.

Calculate his contribution.

Super Contribution =Label

0.04 x 650

= $26.00Calculation

Answer with units.

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Additions & Deductions from Gross Pay

Example 4:

Gabriel earns $1450 per week. He receives 17.5% of four weeks as a Holiday Loading in

addition to his normal pay..

Calculate his holiday pay for 4 weeks.

Holiday Loading =Label

0.175 x 4 x 1450

= $1015.00Calculation

Answer with units.Holiday Pay =

Label

1450 x 4 + 1015

= $6815.00Calculation

Answer with units.

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Budgeting

A statement of income and expenditure.

If income and expenditure are equal then the budget is said to be in

balance.

When creating a budget all amounts should be over the same period.

Monthly, fortnightly or weekly.

Al unspent money should be considered as savings.

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Budgeting

Drawing up a BudgetIncome Expenditure

Wages $950 Mortgage $276.92$110.00$250.00$ 70.00$163.08

$950.00

BillsGroceriesCar

Savings

TotalTotal $950

Income = Expenditure