Pay Periods & Salary
What is gross pay?
The total amount of money earned before taxes and deductions are taken out.
What is regular pay?
Money earned during regular working hours.
What is net pay?
The amount of money earned after taxes and deductions are taken out; also called take-home pay.
What are deductions?
Money taken out of an employee’s paycheck for taxes, benefits, retirement, insurance, or other costs.
What is commission?
Money an employee earns based on sales of goods or services.
If an employee is paid biweekly, how often is the employee paid?
Every 2 weeks, usually 26 times per year.
When does overtime commonly begin?
After 40 hours have been worked in one week.
What does YTD stand for on a pay stub?
Year-to-date
Name one mandatory payroll deduction.
Federal income tax, state income tax, Social Security tax, or Medicare tax.
What is the formula for commission?
Commission=Total Sales×Commission Rate
An employee earns an annual salary of $45,000. What is the monthly gross pay?
$45,000÷12=$3,750
An employee earns $15.70 per hour and works 38 hours. What is the gross pay?
$15.70×38=$596.60
What information does a pay stub usually show?
Gross pay, deductions, taxes, net pay, pay period, and year-to-date totals.
Name one voluntary or elective payroll deduction.
Health insurance, dental insurance, vision insurance, retirement contribution, or life insurance.
An employee earns 25% commission on $7,645 in profit. How much commission is earned?
$7,645×0.25=$1,911.25
An employee earns $3,916.67 per month. About how much is earned annually?
$3,916.67×12=$47,000.04
An employee earns $20 per hour. What is the overtime rate at time-and-a-half?
$20×1.5=$30 per hour
Why is it important to check a pay stub?
To make sure hours, pay rate, earnings, deductions, and net pay are accurate.
An employee’s gross pay is $2,385. Social Security tax is 6.2%. How much is withheld for Social Security?
$2,385×0.062=$147.87
An employee earns $20 per hour, works 45 hours, earns time-and-a-half overtime, and makes $18,000 in sales with a 2.5% commission. What are the total earnings?
Regular pay: 40×$20=$800. Overtime pay: 5×$30=$150. Commission: $18,000×0.025=$450. Total earnings: $800+$150+$450=$1,400.
Job A pays $34,000 annually. Job B pays $620 biweekly. What is the annual salary for Job B, and which job pays more?
$620×26=$16,120. Job A pays more.
An employee earns $15.70 per hour and works 53 hours in one week. Overtime is paid at time-and-a-half after 40 hours. What is the gross pay?
Regular pay: 40×$15.70=$628.00. Overtime rate: $15.70×1.5=$23.55. Overtime pay: 13×$23.55=$306.15. Gross pay: $628.00+$306.15=$934.15.
A pay stub shows gross pay of $2,850 and total deductions of $714.25. What is the net pay?
$2,850-$714.25=$2,135.75
An employee earns gross pay of $4,680. Total deductions are $1,568.36. What is the net pay?
$4,680-$1,568.36=$3,111.64
A salesperson earns a $600 weekly base salary plus commission. The commission plan pays no commission on the first $1,000 in sales, 5% on sales from $1,000 to $4,000, and 8% on sales above $4,000. If sales are $6,500, what are the total earnings?
Commission from $1,000 to $4,000: $3,000×0.05=$150. Commission above $4,000: $2,500×0.08=$200. Total commission: $150+$200=$350. Total earnings: $600+$350=$950.