Employees Gross

Earnings and
Incentive Pay Plan
Definition Of Terms
 Gross Earnings- total amount earned by the
employee in the pay period
 Wage- amount of money paid to employees at a
specific rate per hour
 Salary- is a fixed amount of money paid to an
employee each pay period
 Piecework Basis-employees mat be paid by
results like ‘pakiao’, ‘takay’ and by the pieces of
product
 Commission Basis- they are paid on the basis of
number of units sold
 1
 Overtime rate- employee paid 1 times the
2
regular wage is paid
 Pay period- amount of time for which an employee
is paid
 Time card- most companies use this to keep track
of an hourly wage employee’s hours
Gross Pay or Gross Earnings
Is the amount used to calculate that
employees wages (for an hourly
employee) or salary (for a salaried
employee)
It is the total amount you as the
employer owe the employee for work
during one pay period
Includes regular hourly or salaried pay
and also includes any overtime pay to
the employee during the pay period
For both salaried and hourly
employees, the calculation is
based on an agreed-upon amount
of gross pay. Both the employee
and employer have agreed that
this is the pay rate. The pay rate
should be in writing and signed by
both employee and employer
How to calculate Gross Income
Per Month
FORMULA:
Gross Income Per Month= Annual Salary ÷ 12

 Example 1:
 If you are paid an annual salary of P50,000 per year, the
formula shows that your gross income per month is
P4,166.67.

SOLUTION:

GIPM= P50,000 ÷ 12
= P 4, 166.67
How to calculate Gross Monthly
Income if you’re paid hourly
FORMULA:
𝐻𝑜𝑢𝑟𝑠
Gross Income Per Month= (Hourly Pay) ( 𝑊𝑒𝑒𝑘 )x 52 ÷ 12

 NOTE: If your hours vary week to week, use your best estimate of the
average number of hours you work.

 Example 2:
 If you are paid P12 per hour and work 40 hours per week, your
weekly gross pay is P480. Multiplying by 52 shows an annual
gross income of P24, 960. finally, dividing a gross income of
P2,080 per month.

SOLUTION:
Gross Income Per Month= (12) (40)x 52 ÷ 12
= (480) (52) ÷ 12
= 24, 960 ÷ 12
= P 2, 080
Gross Pay: Determined by Time
 Ledger (electronic or paper)- is used to organize time worked

FORMULA:
Gross Earnings= Number of Hours Worked X Rate per Hour

Example 3:
Hours Worked
Employee M T W TH F Total Rate Gross
Hours Earnings

Dean 8 6.5 8 6 4 32.5 $7.59 $246.

68

SOLUTION:
Gross Earnings= Number of Hours Worked X Rate per Hour
= 32.5 x 7.59
= $246.68
Computing Wages on Piecework
Basis
Example 4:
The production record of Mrs. Cruz, a piecework, is shown
below. Determine the weekly wages if she is paid $1.55 per unit
completed.
Employee No. 28631
Name: Mrs. Gidget Cruz
Week Ending October 2019
DAYS MORNING AFTERNOON TOTAL UNITS
M 10 11 21
T 13 10 23
W 15 12 26
T 16 10 26
F 8 8 16
SOLUTION:
Total Units Completed=21+23+26+26+16
= 112 units
Total Pay= number of units completed x rate per unit
=112 units x $1.55
=$173.60
Computing Wages on
Commission Basis
 Example 5:
 Mr. Naldo Tan, a salesman, sold $25,850 worth of tools. His
quota is $18,000 with a commission rate of 8%. For sales in
excess of his quota. He is given a 10% commission rate.
Determine his total earnings.

SOLUTION:
Gross Earnings= Commission of 8% + commission of 10%
= $18,000 (.08) + (25,850-18,000)(.10)
= 1,440 + 785
=$2,225.00
 Example 6:
Ben Reyes is a salesman receiving a basic salary of
$600 a month. He made a sales of $23,480 last month from
which he earned 8% commission. How much was his total
earnings?

SOLUTION:
Gross Earnings= basic salary + commission
= $600.00 +$23,480 (.08)
= $2,478.40
Overtime
FAIR LABOR STANDARD ACT
For most fulltime workers:
 40 hours workweek
 work above and beyond 40 hours results in
higher than normal pay:
1
1 or 1.5 times normal rate (‘Time-and-a-half’)
2

FORMULA:
Gross Pay= Regular Pay + Overtime Pay
Overtime Pay
 Example 7:
 Compute the gross pay for this employee:
Regular Pay Rate: $9.18 per hour
Hours Worked this Week: 47 Hours
47 hrs – Total Hours
40 hrs – Regular Hours
7 hrs - Overtime Hours
SOLUTION:
Regular Pay
$9.18/ hr x 40 hrs= $367.20
Overtime Pay
1st establish overtime rate of pay: 1.5 x $9.18/hr= $13.77/hr
2nd compute overtime pay: $13.77/hr x 7 hr= $96.39
Gross Pay= Regular Pay + Overtime Pay
= $367.20 + $96.39
= $463.59
Overtime Pay Per Workday
13 hr – Total Hours
 Concept 8 hr – Regular Hours
hr – Overtime
Overtime is paid for all5 work beyond 8Hours
hours in any given day
It is paid whether you reach 40 hours for the week or not
Example 8:
On Monday, kim works 13 hours. Her regular pay rate is
$12.00 per hour. What is her pay on Monday if the company uses
the ‘overtime for over 8 hours of work per day’ method?
SOLUTION:
Regular Pay
8 hours x $12.00/hr=$96.00
Overtime Pay
1st overtime rate of pay: 1.5 x $12.00/hr= $18.00/hr
2nd compute overtime pay: $18.00/hr x 5 hr= $90

Gross Pay= Regular Pay + Overtime Pay

= $96.00 + $90
= $186.00
Incentives Pay Plan
 Incentives- are the rewards to an employee, over
and above his base wage or salary, in recognition
of his performance and contribution

 ‘ An incentive scheme is a plan or programmes to

motivate individual or group performance. An
incentive programme is most frequently built on
monetary rewards but may also include a variety of
non-monetary rewards or prizes ‘
- Burack and Smith
 Example 9:
An employee has exceeded the normal rate of 20 units
completed per day 4 units. If the incentive plan entitles him to
an additional income of $2.00 for every unit in excess of the
minimum output, what is his total earnings for day, assuming
that his regular pay per day is $20.000?
SOLUTION:
Regular Pay= $20.00 per day (assume)
Incentive Bonus= 4 x $2.00= $8.00
Total earnings for day= $20.00 + $8.00
= $28.00
Exercises
1. Hero Stinnes Tiffin is a salesman receiving a basic salary
of $1000 a month. He made a sales of $30,000 last month
from which he earned 5% commission. How much was his
total earnings?

2. In Friday, Noah works 15 hours. His regular pay rate is

$15.00 per hour. What is his pay in Friday if the company
uses the ‘overtime for over 8 hours of work per day’
method?

References:
www.youtube/SouthwestTeachMath/ScienceCenter
Business Mathematics pg. 73-82.

GELYN P. CALAGO
ERICKA JEAN C LABRADOR
BSED-MATH II