MU123
Business Mathematics
Week 11
Using Math in Consumer
Credit and Payroll
Week 11
Learning Outcomes
- Consumer Credit
1. Find the amount financed, the installment price,
and the finance charge of an installment loan.
2. Find the installment payment of an installment loan.
- Calculating Payroll
1. Find the gross pay per pay- check based on salary.
2. Find the gross pay per weekly paycheck
based on hourly wage.
3. Find the gross pay per paycheck
based on piecework wage.
4. Find the gross pay per paycheck based on commission.
Key Terms…
Installment Loans and Closed-End Credit
 Consumer credit
– A type of credit or loan that is available to individuals
or businesses—repaid in regular payments.
 Installment loan
– A loan that is repaid in regular payments.
 Closed-end credit
– A type of installment loan in which the amount
borrowed and the interest is repaid in a specific
number of equal payments.
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Key Terms…
Installment Loans and Closed-End Credit
 Open-end credit
– A type of installment loan in which there is no fixed
amount borrowed or number of payments. Regular
payments are made until the loan is paid off.
 Finance charges or carrying charges
– The interest and any fee associated with an
installment loan.
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Key Terms…
Installment Loans and Closed-End Credit
 Cash price
– Paid all at once at time of purchase.
 Down payment
– Partial payment.
 Amount financed
– Total amount paid in regular payments to pay
off the balance.
 Installment price
– Includes all installment payments, finance
charges and down payment.
Find the amount financed, the installment price,
and the finance charge of an installment loan
Installment Loans and Closed-End Credit
The 7th Inning purchased a mat cutter for the
framing department on the installment plan with
a $60 down payment and 12 payments of $45.58.
Find the installment price of the mat cutter.
Installment Price (IP) =
total of installment payments + down payment
IP = (12 x $45.58) + $60
IP = $546.96 + 60 = $606.96
An Example…
Installment Loans and Closed-End Credit
 Karen purchased a copier on the installment
plan with a down payment of $50 and 6 monthly
payments of $29.95. Find the installment price.
– $229.70
Find the Installment
Payment of an Installment Loan
Installment Loans and Closed-End Credit
We can find the installment payment if
we know the installment price, the down
payment and the number of payments.
STEP 1
Find the amount financed; subtract the down payment
from the installment price.
STEP 2
Divide the amount financed by the number of
installment payments.
An Example…
Installment Loans and Closed-End Credit
The installment price of a pool table was $1,220 for
a 12-month loan. If a $320 down payment was
made, find the installment payment.
Installment Price = $1,220
$1,220 - $320 = $900
$900 ÷ 12 = $75
The installment payment is $75.
An Example…
Installment Loans and Closed-End Credit
 Peggy bought a new dryer on an installment plan.
She made a down payment of $100. The
installment price for a five month loan was
$412.50. What was the installment payment?
– $62.50
EXERCISE SET A
EXERCISE SET A
2. Calculating Payroll
 Find the gross pay per pay- check based on
salary.
 Find the gross pay per weekly paycheck based on
hourly wage.
 Find the gross pay per paycheck based on
piecework wage.
 Find the gross pay per paycheck based on
commission.
Key terms…

Find the gross pay per pay- check based on salary.
 Pay periods:
– Weekly: once a week or 52 times a year.
– Biweekly: every two weeks or 26 times a year.
– Semimonthly: twice a month or 24 times a year.
– Monthly: once a month or 12 times a year.
An Example…

Find the gross pay per pay- check based on salary.
Nicole earns $36,000 a year and
is paid on a weekly basis.
What is her gross pay per week?
Divide $36,000 by 52 pay periods.
$692.31
What if she is paid on a semimonthly basis?
$1,500.00
2. Calculating Payroll

Gross pay
Find the gross earnings for:
 Carolyn, who earns $15,000 a year and is paid
weekly.
– $288.46
 Martha, who earns $48,000 a year and is paid
biweekly.
– $1,846.15
 Bill, who earns $35,000 a year and is paid
semimonthly.
– $1,458.33
Key terms…

Gross pay
 Gross earnings (gross pay)
– The amount earned before deductions.
 Net earnings (net pay/take-home pay)
– The amount of your paycheck.
 Hourly rate or hourly wage
– The amount of pay per hour worked based on a
standard 40 hour work week.
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Key terms..

Find the gross pay per pay- check based on salary.
 Hourly rate or hourly wage
– The amount of pay per hour worked based on a
standard 40 hour work week.
 Overtime rate
– Rate of pay for hours worked that exceed 40
hours per week.
 Time and a half
– Standard overtime rate that is 1½ (or 1.5) times
an hourly rate.
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Key terms…
Gross pay
 Regular pay
– Earnings based on an hourly rate of pay.
 Overtime pay
– Earnings based on overtime rate of pay.
Gross pay per week based on hourly wages
Gross pay
STEP 1
Find the regular pay by multiplying the number of hours
(40 or less) by the hourly wage.
STEP 2
Find the overtime pay by multiplying the hourly rate by the
overtime rate (usually 1.5) and then multiply that rate by
the number of hours that exceed 40.
STEP 3
Add the figures from Step 1 and Step 2.
Gross pay per week based on hourly wages
Gross pay
Theresa worked 45 hours last week. If her hourly
rate is $10.50/hour, find her total gross earnings.
Multiply 40 x $10.50 = $420.00
To calculate the overtime amount, multiply her hourly
rate by 1.5: $10.50 x 1.5 = $15.75
Multiply the overtime rate ($15.75) x the number of
overtime hours (5): $15.75 x 5 = $78.75
Add the regular and overtime pay: $498.75
Examples…
Gross Pay
The regular hourly rate in the production
department for these employees is
$6.50, and overtime is paid at 1.5.
Find the weekly earnings for these employees:
 Marcus, who worked 48 hours
– $338
 Allison, who worked 44 hours.
– $299
Examples…
Gross Pay
 Many employers motivate employees to produce
more by paying according to the quantity of
acceptable
– Such piecework rates are typically offered in
production or manufacturing jobs.
Key terms…
Gross Pay
 Piecework rate
– Amount of pay for each acceptable item produced.
 Straight piecework rate
– Piecework rate where the pay per piece is the
same no matter how many items are produced.
 Differential (escalating) piece rate
– Piecework rate that increases as more items
are produced.
Examples…
Gross Pay
Jorge assembles microchip boards.
He is paid on a differential piecework basis.
Rates are as follows:
From 1-100
$1.32 per board
From 101-300
$1.42 per board
301 and over
$1.58 per board
If he assembles 317 boards how much will he earn?
An Example…
Gross Pay
Rates are as follows:
From 1-100
$1.32 per board
From
101-300
$1.42 per board
100 x $1.32
= $132.00
301 and over
$1.58 per board
101 to 300 = 200 x $1.42 = $284.00
17 x $1.58 =
$ 26.86
Total earnings:
$442.86
An Example…
Gross Pay
Try this example
Jillian gets paid a differential piece rate for
each shirt she sews. Consult the chart
and calculate her weekly earnings
if she sewed 352 shirts last week.
From 1-100:
From 101-300:
301 and above:
$0.47 each
$0.60 each
$0.70 each
What were her earnings?
$203.40
Gross pay per paycheck
based on commission
Gross Pay
 Many salespeople earn a commission, a
percentage based on sales.
 Commission:
– Earnings based on sales.
 Straight commission
– Entire pay based on sales.
 Salary plus commission
– A set amount of pay plus an additional amount
based on sales.
Gross pay per paycheck
based on commission
Gross Pay
 Commission rate:
– Percent of sales that are eligible for a commission.
 Quota
– A minimum amount of sales that is required before a
commission is applicable.
An Example…
Gross Pay
Marisa is a restaurant supplies salesperson and
receives 6% of her total sales as commission.
Her sales totaled $12,000 during a given week.
Find her gross earnings.
Use the formula: P = R x B to find her earnings.
P = 0.06 x $12,000 = $720
Marisa’s earnings are $720
An Example…
Gross Pay
Melanie Brooks works for a cosmetics company and
earns $200 a week in salary plus 30% commission on
all sales over $500. She had sales of $1,250 last week.
How much were her total earnings?
Her salary would be $200 plus any applicable commission.
The commission would be calculated at 30% on $750
in sales or $225. Add this amount to her base salary.
The total is $425.
EXERCISE SET A
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EXERCISE SET A
EXERCISE SET A
EXERCISE SET A
EXERCISE SET A
Thank you