September 7, 2016 at 12:55 pm
Why is the employee’s wages not 397.00 but 397.50?
I am referring to the question (example 1) on page 97, in the FIA FA1 PDF notes.
I calculated the wages as per the method provided in BPP textbook.
Basic pay: 40 hours x $7= 280
Payment per hour of overtime: $7 +(50% x $7)= $10.5 per hour
Employee worked 4 hours (44h-40h) more than the standard time so: $10.5 x 4h= 42
Pay for overproduction: 15 additional units (135 units-120 units) x $5 (cost per unit for overproduction)= 75
After adding up the basic pay, the pay for overtime work and overproduction, I figured out that an employee’s wages in a week in which 135 units are made and the
employee works 44 hours is $397.00 (280.00+42.00+75.00).
Can someone, please, explain to me why my answer isn’t correct? Thank you in advance.September 7, 2016 at 3:23 pm
Not sure where you are looking. Perhaps not the latest notes.
Example 1 is on page number 99 (PDF page number 97)
The answer, 379.50, is on page number 105 (PDF page 107).
The answer follows the rules specified in the question.
Perhaps the BPP example used a different formula (it is up to employers to arrive at a formula).September 8, 2016 at 2:24 pm
@ Ken Garrett: Thanks for your reply. However, on how to calculate the overtime premium that could be associated with the extra units, I don’t know why it wasn’t simply calculated as:
15 x $7 x 1/2.
In the solution, 1/3 was included in the calculation.I know it is the duration expected to take for each unit, but then it wasn’t included in the question prompt… So why add it later? 🙂September 8, 2016 at 3:58 pm
Employees are paid $7/hour for a standard 40 hour week. Overtime is paid at time and
one half. The employee is expected to make at least 120 units in a week, and to encourage
productivity, each unit in excess of 120 will generate an additional payment of $5 less any
overtime premium that would relate to the time the additional unit would normally take.
What is an employee’s wages in a week in which 135 units are made and the
employee works 44 hours?
Because to make 15 more units than budgeted, doesn’t take 15 more hours, it should take only 5 more hours so the overtime premium related to that is 5 x 7 x 0.5 = 17.5.
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