CHAPTER 6

AVERAGES, PERCENTS,
PERCENT CHANGES,
AND APPLICATIONS
TOPICS
TOPICS

6.1 Averages
6.2 Percents
6.3 Percent Changes
6.4 Payroll
6.4 PAYROLL

An important
The numberpartofofemployees,
employmenttheir
is the remuneration
payment periods, that
and we
the receive
amount for the services
of payment that wetoprovide.
is referred as payroll.

All companies have a system to keep track of

Payment can be made as:
all employees and their compensation.

An An
Commissions
Hourly Rate Annual Salary
6.4 PAYROLL

When employees are requested to work more than

A common option for organizations that employ part-time employees is to
the
Employees
set number
paidofhourly
hoursdopernotweek,
usually
theyhave
are apaidfixedannumber
overtimeof amount.
hours.
The total payment
pay themforana hourly
time period
rate oris wage.
calculated by
multiplying the total number of hours worked by the hourly rate of pay.
The
For overtime
most employees,
rate is usually
the maximum
one andnumbera half oftimes
hours theworked
regularper
hourly
weekrate;
is
The hourly rate of pay can differ from one organization to another.
limited to 44 hours,
however,
andthere
the number
are companies
of workthat hoursalsoin pay
a day is 8 hours.
However, in Canada the minimum hourly wage is set for employees.
twoHourly
times Rate
the regular hourlyforrate
- Payment PayasPeriod
the overtime
Formula rate.

Payment for pay period = hourly wage × total number of hours worked
6.4 PAYROLL
Laurence has an hourly wage of $11.25.
This month he has worked 84 hours.
How much will Laurence receive for his work this month?

Payment for pay period = hourly wage × total number of hours worked

= (11.25) × (84)
= $945

Laurence will receive $945 for his work this month.

6.4 PAYROLL
Sara made $391.50 for a week she worked 30 hours.
How much is her hourly rate of pay?

Payment for pay period = hourly wage × total number of hours worked
Hourly wage × (30) = (391.50)

= $13.05
Sara’s hourly rate of pay is $13.05.
 6.4 PAYROLL
Ned is paid an hourly rate of $12.55 and received
$878.50 for a bi-weekly pay period.
How many hours did Ned work that pay period?
Payment for pay period = hourly wage × total number of hours worked
(12.55) × Hours worked = (878.50)

= 70
Ned worked 70 hours during his bi-weekly pay period.
6.4 PAYROLL

The employees
Most salary
In order
is then
tothatcalculate
paid
are out the
hiredto tothe
payment
employee
work onfora afull-time
onparticular
a setbasis
frequency
period, thatan
are paid
allows
we must
the employee
divide the toannualannual
organize salary.
salary
theirby funds
the payments
throughoutpertheyear.
year.

Payment Type
Annual
Payment Frequency
Salary Payment - Pay Period Formula
Payments Per Year
Weekly Payments Once per week 52
Bi-Weekly Payments Once every two weeks 26
Semi-Monthly Payments Twice per month 24
Monthly Payments Once per month 12
6.4 PAYROLL
Spencer is paid an annual salary of $52,000.
How much does Spencer receive if payments are made bi-weekly?

= $2,000

Spencer will receive $2,000 bi-weekly from his annual salary.

6.4 PAYROLL

Employees
Organizations
with
Overtime
willanvary
annual
isonpaid
the
salary
on
calculation
will
an hourly
oftenof work
basis
overtime,
‘overtime’,
and but thewhich
mostis
common
considered
rateadded
work
woulddone
tobethe‘time
above
amount
and
the received
ahours
half’ included
(1.5)
from the
orin ‘double
salary.
the annual
time’salary.
(2).

Hourly and Overtime Wage Formulas

Overtime Wage = Hourly Wage × Overtime Rate

 6.4 PAYROLL
Sam earns an annual salary of Hourly Pay = $14.42
$30,000 and works 40 hours per
week.
= 576.923076…
During busy periods, Sam
occasionally works overtime.

How much would Sam receive in a

weekly pay period where 5 overtime
hours were worked at double time? = 14.423
= $14.42
 6.4 PAYROLL
Sam earns an annual salary of Hourly Pay = $14.42
$30,000 and works 40 hours per
week. Overtime Wage = Hourly Wage × Overtime Rate
= (14.42) × (2)
During busy periods, Sam
= $28.84
occasionally works overtime.
Overtime Pay = Overtime Wage × Overtime Hours
How much would Sam receive in a = (28.84) × (5)
weekly pay period where 5 overtime
hours were worked at double time? = $144.20
 6.4 PAYROLL
Sam earns an annual salary of Overtime Pay = $144.20
$30,000 and works 40 hours per
week. Weekly Pay = $576.92

During busy periods, Sam Total Pay = Overtime Pay + Weekly Pay
occasionally works overtime. = (144.20) + (576.92)
= $721.12
How much would Sam receive in a
weekly pay period where 5 overtime
hours were worked at double time? Sam will receive $721.12 for that pay period.
6.4 PAYROLL

Commission based pay is meant to reward employees for

Those that are employed in organizations that focus on sales
the total sales they make for a given period,
will often be paid by commission.
based on the percent of commission that is offered.

Commission based income can be applied in various ways such as:

Commission Only Tiered Commission Base + Commission

6.4 PAYROLL

Employees such as real estate agents and those involved in car sales
To calculate total commission,
will earn their income based solely on the commission
multiply the total sales with the percent of commission.
they receive from their total sales.

Total Commission Formula

Total Commission = Commission Percent × Total Sales

6.4 PAYROLL
Wendy sells cars and earns commission only pay on each car she sells.
Last year she sold $1,526,300 worth of cars.
How much did she receive if she earned 3.15% commission on all sales?

Total Commission = Commission Percent × Total Sales

= (3.15%) × (1,526,300)
= 0.0315 × 1,526,300
= $48,078.45
Wendy will receive $48,078.45 from her commission.
6.4 PAYROLL

As an incentive to sell more,

often a company will offer ‘tiered’ commission to its employees.

This means that there will be an increase in

the percent of commission earned depending on the amount of sales made.
6.4 PAYROLL
Kent sells insurance.
In a one month period, he received 4.8% on the first $15,000 of sales, 5.7%
on the next $12,000 of sales and 6.3% on all remaining sales.
How much did Kent receive that month on total sales of $49,000?
Total Commission = (4.8%)(15,000) + (5.7%)(12,000) +
(6.3%)(49,000 – 15,000 – 12,000)
= (0.048)(15,000) + (0.057)(12,000)
+ (0.063)(22,000)
= 720 + 684 + 1,386
= $2,790
Kent will receive $2,790 that month for his total sales.
6.4 PAYROLL

Another payment option that some organizations utilize is

the base + commission model.

This allows an employee to receive a base pay + the ability to earn more
money based on the sales made for the payment period.
6.4 PAYROLL
Bailey works at an eyeglass store.
Bailey’s hourly rate is $13.20 + 4.9% commission on sales over $10,000.
How much did Bailey receive in a two week period
where 70 hours were worked and a total of $20,145 was sold?
Total Pay = Hourly Pay + Commission
= (13.20)(70) + (4.9%)(20,145-10,000)
= (13.20)(70) + (0.049)(10,145)
= 924 + 497.105
= $1,421.11
Bailey will receive $1,421.11 for the two week period.
Evaluate the problem.

Tamara worked 26 hours last week for which she received $377.
What is her hourly rate?

A) $13.75
B) $14
C) $14.25
D) $14.50
Evaluate the problem.

Tamara worked 26 hours last week for which she received $377.
What is her hourly rate?

Payment for pay period = hourly wage × total number of hours worked
Hourly wage × (26) = (377)

= $14.50
Tamara’s hourly rate is $14.50.
Evaluate the problem.
Randall earns an annual salary of $45,000.
How much does he receive if payments are made semi-monthly?

A) $865
B) $1,731
C) $1,875
D) $3,750
Evaluate the problem.
Randall earns an annual salary of $45,000.
How much does he receive if payments are made semi-monthly?

= $1,875
Randall receives $1,875 semi-monthly from his annual salary.
Evaluate the problem.
Charlie’s company pays commission on all sales.
Salespeople earn 0.6% on the first $300,000 of sales, 1.7% on the next
$200,000 of sales and 2.1% on all remaining sales.
How much did Charlie receive in a month with $674,000 in total sales?

A) $8,854
B) $8,954
C) $9,854
D) $9,954
Evaluate the problem.
Charlie’s company pays commission on all sales.
Salespeople earn 0.6% on the first $300,000 of sales, 1.7% on the next
$200,000 of sales and 2.1% on all remaining sales.
How much did Charlie receive in a month with $674,000 in total sales?
Total Commission = (0.6%)(300,000) + (1.7%)(200,000) +
(2.1%)(674,000 – 300,000 – 200,000)
= (0.006)(300,000) + (0.017)(200,000) +
(0.021)(174,000)
= (1,800) + (3,400) +(3,654)
= $8,854
Charlie will receive $8,854 for this month.