Chapter 2, Problem 3SSQ

Compute the hourly and overtime rates for a standard 40-hour workweek for the following amounts:

To determine

Calculate the hourly rate and overtime rate for earnings $525 weekly.

Explanation of Solution

Regular earnings: Generally, employees in a firm work in pre-determined hours (40 hours) and get paid accordingly. The amount of earnings that is calculated based on predetermined hours is called as regular earnings of an employee.

Overtime Earnings: If an employee works more than the stipulated working hours (more than 40 hours) of the employment then, the employee is mandated to get paid one and a half times more than the normal working pay. This one and half times can be termed as overtime premium or earnings.

Calculate hourly rate.

$\begin{array}{c}\text{Hourly rate}=\frac{\text{Regular earnings}}{\text{Regular working hours}}\\ =\frac{\$525}{40}\\ =\$13.13\end{array}$

Calculate the overtime rate.

$\begin{array}{c}\text{Overtime rate}=1\frac{\text{1}}{\text{2}}\text{ times the hourly rate}\\ =\text{1}\frac{\text{1}}{\text{2}}\times \$13.13\\ =\$19.70\end{array}$

Hence, the hourly rate and overtime rate for earnings $525 weekly is $13.13 and $19.70 respectively.

To determine

Calculate the hourly rate and overtime rate for earnings $892 biweekly.

Explanation of Solution

Calculate hourly wage rate.

Step 1: Calculate regular earnings for a week.

$\begin{array}{c}\text{Regular earnings for a week = }\frac{\text{Biweekly earnings}}{\text{2}}\\ =\frac{\$892}{2}\\ =\$446\end{array}$

Step 2: Calculate hourly rate.

$\begin{array}{c}\text{Hourly rate}=\frac{\text{Regular earnings}}{\text{Regular working hours}}\\ =\frac{\$446}{40}\\ =\$11.15\end{array}$

Calculate the overtime rate.

$\begin{array}{c}\text{Overtime rate}=1\frac{\text{1}}{\text{2}}\text{ times the hourly rate}\\ =\text{1}\frac{\text{1}}{\text{2}}\times \$11.15\\ =\$16.73\end{array}$

Hence, the hourly rate and overtime rate for earnings $892 biweekly is $11.15 and $16.73 respectively.

To determine

Calculate the hourly rate and overtime rate for earnings $1,450 semimonthly.

Explanation of Solution

Calculate hourly wage rate.

Step 1: Calculate regular earnings for a week.

$\begin{array}{c}\text{Regular earnings for a week = }\frac{\text{Annual earnings}}{\text{Number}\text{of}\text{weeks}\text{in}\text{a}\text{year}}\\ =\frac{\$1,450\text{semimonthly}\times \text{2 times}\times 12\text{months}}{52\text{weeks}}\\ =\frac{\$34,800}{52\text{weeks}}\\ =\$669.23\end{array}$

Step 2: Calculate hourly rate.

$\begin{array}{c}\text{Hourly rate}=\frac{\text{Regular earnings}}{\text{Regular working hours}}\\ =\frac{\$669.23}{40}\\ =\$16.73\end{array}$

Calculate the overtime rate.

$\begin{array}{c}\text{Overtime rate}=1\frac{\text{1}}{\text{2}}\text{ times the hourly rate}\\ =\text{1}\frac{\text{1}}{\text{2}}\times \$16.73\\ =\$25.10\end{array}$

Hence, the hourly rate and overtime rate for earnings $1,450 semimonthly is $16.73 and $25.10 respectively.

To determine

Calculate the hourly rate and overtime rate for earnings $2,600 monthly.

Explanation of Solution

Calculate hourly wage rate.

Step 1: Calculate regular earnings for a week.

$\begin{array}{c}\text{Regular earnings for a week = }\frac{\text{Annual earnings}}{\text{Number}\text{of}\text{weeks}\text{in}\text{a}\text{year}}\\ =\frac{\$2,600\text{per}\text{month}\times 12\text{months}}{52\text{weeks}}\\ =\frac{\$31,200}{52\text{weeks}}\\ =\$600\end{array}$

Step 2: Calculate hourly rate.

$\begin{array}{c}\text{Hourly rate}=\frac{\text{Regular earnings}}{\text{Regular working hours}}\\ =\frac{\$600}{40}\\ =\$15\end{array}$

Calculate the overtime rate.

$\begin{array}{c}\text{Overtime rate}=1\frac{\text{1}}{\text{2}}\text{ times the hourly rate}\\ =\text{1}\frac{\text{1}}{\text{2}}\times \$15\\ =\$22.50\end{array}$

Hence, the hourly rate and overtime rate for earnings $2,600 monthly is $15 and $22.50 respectively.