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    Business math

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    You asked the employees of Financial Outsourcing , Inc, to provide some sample informational questions to put on the FAQ ( Frequently Asked Questions ) page within the company web site. These are the questions they supplied:

    1. Sally worked 48 hours this week. Her overtime rate is 1.5 times the regular rate. When calculating gross pay with overtime, there are two options:

    ( total regular hours X hourly rate ) + ( overtime hours X overtime rate ) = gross pay, OR

    ( total number of hours worked X the hourly rate) + ( hours over 40 X 0.5 the hourly rate)

    Most businesses prefer to use the first method to calculate gross pay . Discuss the reasons for this preference.

    2. Many people think that if an increase in earnings moves their salary to a higher tax bracket , their entire salary will be taxed at the higher rate. Is this true? Give an example to justify your answer.

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    Solution Preview

    1. The reason for this preference is simply from calculation and bookkeeping point of view. It is easier to tabulate the hours worked regularly (which is often 40 hours a week), and the hours worked overtime (over and above 40 hours). In the latter case, you would have to record the overtime hours anyway, which ...

    Solution Summary

    There are two questions here regarding earnings, gross pay, and tax rate.