Business Math 2nd Quarter PDF

QUARTER II COMMISSION & WAGE AND SALARY COMMISSIONS a commission is a percentage of a sale awarded to person who has successfully made the sale of goods or services. Business organizations use the strategy of commissions as incentive to sales persons to bring in more sales. TYPES OF COM...

QUARTER II COMMISSION & WAGE AND SALARY COMMISSIONS a commission is a percentage of a sale awarded to person who has successfully made the sale of goods or services. Business organizations use the strategy of commissions as incentive to sales persons to bring in more sales. TYPES OF COMMSSIONS 1. Straight Commission 2. Salary Plus Sales Commission 3. Graduated Commission STRAIGHT COMMISSION is the income earned by a sales agent based on sales made and is computed as a percentage of that sale. Y = r (R) Where, Y earned by a salesperson r is the agreed fraction of sales R is the monetary value of sales SALARY PLUS SALES COMMISSION in this commission structure, a salesperson receives a pre-determined and fixed salary. In addition to this, he or she receives an additional income based on the achievement of specific sales target. Y = r (R- SQ) Where, Y earned by a salesperson r is the agreed fraction of sales R is the monetary value of sales SQ is the sales quota GRADUATED COMMISSION a graduated commission (stair step structure) is a commission that varies according to the sales targets achieved. It is a system where the commission earned increases incrementally as sales volume increases. Practical Problems 1. Alden receives 20% commission for every appliance he sells. He sells a TV for 25,000 Php, a refrigerator for 45,000 Php, and 48,000 Php for a laptop computer find the total commission he earned. 2. Joseph transfer to another store that pays a fixed salary of 18,000 Php a month and a commission of 20% of each monthly sale above 500,000 Php. In one particular month, he sold a refrigerators worth 330,00 Php and HD video cameras worth 290,000 Php. a. Find his commission b. Find his gross income for the month 3. Carla works on a commission basis only and receives 3% on her monthly sales without a base salary. What is her commission and total pay during a month when she sells 120,000 Php worth of appliance, but her customer cancelled an order for 12,000 Php and returned the appliance which was already delivered? 4. Mr. Cruz decides to work for ABC company that will pay him 3,500 Php per week and 6% of any sales above 3,000 Php. If he sold goods worth 5,000 Php, what is his gross pay? 5. Joel Santos is a sales person at Computer World. He receives a graduated commission of 4% on his first 100,000 Php of sales, 6% on the next 200,000 Php, and 8% on sales over 300,000 Php. Joel’s sales for the month totaled 980,000 Php. What is his commission for the month? COMMISSION ON CASH BASIS - a commission on cash basis is one which is paid to a salesperson when a customer pays the full amount of goods or services “in cash”. - when customers pay the full payment outright, a sales person receives his/her full commission. COMMISSION ON INSTALLMENT BASIS - in many business transactions, costumers pay only a fraction of the full price as down payment and pay the balance on installment basis. As such, it is called deferred commission. Examples: Real estate properties, cars, insurance, and educational plan, etc. A Toyota Car Super Grandia is being sold at Php 3,250,000.00. A customer can pay it in cash or installment basis where in a buyer is required to make a down payment and pay the balance with interest for a period of no more than 5 years. Down payment is 20% of contract price. Monthly installment is Php 55,000.00 for 5 years. A sales person found a customer who is interested to buy a car. a. Find the commission earned by the salesperson if he earns 5% of sales when it is paid in cash. b. Find the total commission if the sales person earns 3% of down payment and 2% of the monthly installments for 5 years. c. Find the commission earned by the sales person if the customer stops paying after 3 years.  WAGE AND SALARY Wage is a payment made to a person for labor or services rendered. The amount of wage is agreed upon in a contract (written or unwritten) and is paid hourly, daily, or on a piecework basis. Salary is a fixed amount of money paid to an employee by an employer for work rendered in an organization (paid bi- weekly or every two weeks). WAGE VS. SALARY Wage Applies to a form of payment to manual labor, skilled or unskilled, paid at stated times. In most cases in the country, wages are used to refer to sums of money paid to domestic helpers, laborers, mechanics, etc. Salary denotes a higher degree of employment and implies a position such as clerks, teachers, officers of a corporation, public offices, etc. or office in an organization. MINIMUM WAGE The “statutory minimum wage” is the lowest fixed wage rate mandated by the law that employers must pay their workers. There are two general classification of minimum wage: non- agricultural workers and agricultural workers. Regional Tripartite Wages and Productivity Board (RTWPB) is the government agency responsible for setting the minimum wage for each region in the country. COST OF LIVING ALLOWANCE (COLA) is the amount of money an employee receives to compensate for the loss of purchasing power of money due to inflation. INCOME is the amount of money a business or person receives in exchange for services or goods rendered. Income can be earned from work, investments, business, royalties, etc. Gross earnings derived from whatever source; 1. Payment for services rendered such as salaries, wages, commissions, and similar items 2. Income derived from the exercise of trade or profession 3. Gains made from dealings in property 4. Interest 5. Rent Finding the monthly gross earnings of a wage earner Note: Use the Regional Minimum Wage Table to estimate the monthly gross earnings of a wage earner for each the indicated conditions. Assume that on average a wage- earner works 26 working days a month. Use the middle value of the minimum wage rate. a. a factory worker in Laguna export processing zone. b. an agricultural worker who works in a plantation in Valencia, Bukidnon. c. a bus mechanic who works in Davao Region d. a bus mechanic who works in Cebu City e. a sales associate who works in Makati City f. a house keeping who works in General Santos City Table 1. Regional daily minimum wage rates, agriculture and non-agriculture, 2024 Hourly daily wage rate The daily wage rate per hour rh is the corresponding payment a wage earner receives for each hour of work. If r is the daily wage rate then rh= Hourly daily rate The daily rate per hour rh is the corresponding salary per hour an employee receives in one hour of work. If r is the daily wage rate of an employee, then then rh= OVERTIME PAY is the additional compensation given to an employee for work rendered beyond the normal eight hours of work a day. It is computed by multiplying the overtime rate with the number of hours in excess of regular eight hours of work. Overtime rate per hour on ordinary days Let ro be the overtime rate per hour, then ro = rh + (25% x rh) or ro = rh (125%) Where; rh is the hourly rate of an employee, Overtime pay If O is overtime pay, then O = ro x n, where ro is the overtime rate and n is the number of hours work in excess of 8 hours. Practical Problems: 1. A paralegal assistant of a law firm earns a daily wage rate of Php 710.00. his supervisor requested him to work overtime to finish the documents needed for the next day’s court hearing. The paralegal worked 2 hours more. Assume that it was 26 ordinary working days. a. find the overtime rate b. Find the overtime pay c. Find his gross earnings for the month 2. Allan Cruz is a mechanic who earns a daily wage of Php 680.00 in Pasay City. In one particular month, he incurred an overtime of 8 hours. Assume that he worked for 26 ordinary work days for that month. a. Find his overtime rate b. Find his total overtime pay for the month c. Find his gross earnings for the month 3. Allan Cruz is the administrative assistant of a private school. He earns a salary of Php 30,000 a month. In one particular month, he was requested to work overtime to prepare the school for the opening of classes. He incurred a total of 10 hours overtime. Assume that he worked for 26 ordinary work days for that month. a. Find his overtime pay b. Find his gross earnings for that month WEEKLY RESTDAY Employees have the right to a rest period of no less than 24 consecutive hours after every 6 normal workdays. Employers usually choose the particular rest days but shall respect the preference of employees especially for religious reasons. Work done on rest days shall be paid a regular compensation plus 30% of an employee’s daily rate. Overtime pay during rest days is paid the regular hourly rate plus 30% of the hourly rate multiplied by the number of hours worked in excess of 8 hours. Compensation during rest days Let Yr be the employee’s compensation for one rest day then Yr = r + (30% x r) or Yr = r (1.30) Where r is the daily rate for ordinary workdays. Overtime pay is O = rh x n where ro = rh x 130% and n the number of hours in excess of 8 hours. Example: John Cruz works as supervisor in a certain company. He earns a salary of Php 28,500 a month. In one particular month, he incurred 7 overtime hours in ordinary work days and 2.5 hours during rest days. He also reported to work on two rest days. Assume that the month has 27 ordinary work days. a. Find his overtime pay b. Find the compensation he received for working on two rest days. c. Find the gross earnings for the month. PAYMENT OF WAGES ON REGULAR HOLIDAYS, SPECIAL (Non- working) DAYS, SPECIAL HOLIDAYS Table 1. Payment of wages for regular holidays, special non-working holidays, and special holidays Examples: 1. Raymond Cruz, a construction engineer, works at ABC construction company and earns a monthly salary of Php 35,000 a month. For the month of May he incurs 8.5 overtime hours during ordinary work days. He is also required to report on May 1 which is his rest day with 2.5 overtime hours during that day. Find his gross earnings for the entire month of May (assume that the month has 27 workdays). 2. Mylene Santos is a pharmacy assistant earning a daily wage of Php 650 in a drugstore in the city. The store manager requests her to report for work on Maundy Thursday, Good Friday, Holy Saturday, and Easter Sunday. Find her gross income for the period March 16-31. Assume that Sunday is a rest day. BENEFITS Employee benefits are a form of compensation paid by employers to employee’s on top of the regular base pay. Benefits form part of the total compensation package for employee’s. The Philippine Labor Code defines 6 basic benefits for an employee. Any legally employed worker who works 8 hours a day on 48-hours a week schedule is covered by the Philippine Labor Code. The six basic benefits are: 1. Social Security Contributions Both employee and employer contribute to the social security benefits of the said employee. Monthly employee contribution depend on the employee’s actual monthly salary. 2. Contributions to the National Health Insurance Program (NHIP) The NHIP is administered by Philippine Health Insurance Corporation (PhilHealth) Contributions to NHIP depend on the monthly salary of an employee 3. Contributions to Home Development and Mutual Fund (HDMF) or Pag-ibig Fund Both employers and employees are required to make a monthly contribution of no less than Php 100 to HDMF. 4. 13th Month Pay Employers required by presidential decree No. 851 to give their employees a bonus salary equivalent to a one-month salary not later than December 24 of each year. 5. Service Incentive Leave An employee who has rendered at least one year of service is entitled to a five days service incentive leave a year with pay. 6. Meals and Rest Period Empolyee’s are entitled to a one-hour rest period for meals for those working on 8- hours a day schedule. Mandatory Deductions 1. Philhealth Contributions For each employee, the monthly contributions to Philhealth is 5% of monthly income and this is divided 50-50 between employee and employer. 2. Pag-ibig Fund Contributions For Pag-ibig fund the maximum monthly compensation used in computing for employee contribution is set at Php 5,000. The employee contribution is set at 2% of Php 5,000 which is Php 100. The employers contribution to the fund is also 2% of Php 5,000 which is also Php100. 3. SSS Contributions Monthly contributions to SSS are based on the monthly compensation of members. Current contribution rate is 10% of the monthly salary credit not exceeding Php29,750. This rate is shared by both employer (7.37%) and employee (3.63%). Examples: 1. An agricultural worker who works in Malaybalay City, bukidnon is paid a daily wage of Php378-Php 393 a day. a. Find the agricultural worker gross monthly income based on 26-day working days in a month. b. Find the agricultural worker contributions to Philhealth, Pag-ibig Fund, and SSS (Mandatory deductions CM) c. Find the net earnings for the month 2. A driver in a bus company operating in Metro manila is paid a daily wage of Php 645 a day. a. Find the drivers gross monthly income based on 26-day working days in a month. b. Find the drivers contributions to Philhealth, Pag-ibig Fund, and SSS (Mandatory deductions CM) c. Find the net earnings for the month Taxable Income Taxable income as the name says is income which is subject to taxation. However, not all income is subject to tax. A few examples of incomes which are not taxable are: a. pensions received from life insurance b. 13th month pay c. Mandatory benefits received as contributor to SSS, GSIS, Pag-ibig, and Medicare d. Fringe benefits and benefits given to rank and file employees; e. Employer contributions for the benefit of the employee retirement,insurance, and hospitalization benefit plans; f. Other benefits authorized by and exempted from tax under special laws; Taxable Income Taxable income YT is computed based on the formula, YT = Y + YO + YH – T- A - CM Where; Y is the monthly basic pay YO is the overtime pay YH is the holiday pay T is tardiness A is absences CM is the mandatory deductions Example: Mr. John Cruz is a mechanical engineer working at ABC construction company in Poblacion Davao City. He earns a salary of Php 48,500 a month. For the month of June, the Human Resource Department shows the following information: Ordinary workdays overtime- 7.5 hours Holiday and rest day overtime- 3.5 hours Worked on June 12 (a regular holiday and rest day) Tardiness- 90 minutes Absences- 3.5 days Assume that the total number of workdays for June 2023 is 26 days. Find the following: a. daily pay rate f. Total mandatory contribution b. overtime pay g. Taxable income c. Holiday pay h. Tax payable a year d. Tardiness i. Monthly tax payable e. Absences j. Net earnings for the month Payroll A payroll is the list of company’s employee’s and the amount of money they are paid. E-payroll and E-Spreadsheet Net Earnings Net earnings or net income is what is left of a person’s gross income after the mandatory contributions and taxes have been deducted. To find an employee’s net earnings requires four steps: a. Find gross earnings b. Compute mandatory contributions c. Find the tax rate for an employee and compute his or her taxes; d. Subtract the mandatory contributions and taxes from gross income The Payslip An employees receives a payslip at the end of each payment period. It is a statement of his or her income, contributions, tax withheld and other deductions for a particular working period. It also information pertinent to one’s employment such as the monthly basic pay, hourly rate, employee number, start of employment, SSS number, etc. the payslip can be automatically generated from the electronic payroll.