Business Mathematics: Payroll - Salary

If instead of being paid on an hourly basis, an employee is paid by the week, the month, or the year, he or she is said to be “on salary.”

Example
Joe’s salary is $400 a week. What is his annual salary? Since there are 52 weeks in a year, we multiply $400 by 52.
$400/wk × 52 wk/yr = $20,800/yr
Now assume the reverse situation. You know your annual salary is $20,800, but you want to determine your weekly salary. In this case you divide by 52.
$20,800 ÷ yr - 52 wk/yr = $400/wk

Example
Suppose that your salary is $1,400 per month. What is your annual salary?
A year has 12 months; therefore, to find your annual salary, multiply the monthly salary by 12.
$1,400/mo × 12 mo/yr = $16,800/yr
Similarly, if we know the annual salary, we can divide by 12 to find the monthly salary. Assume that Ruth Appel has an annual salary of $16,800. What is her monthly salary?
$16,800/yr ÷ 12 mo/yr = $1,400/mo

Solved Problems

3.22   P. Bloomfeld is paid $40,000 annually. His pay period is biweekly. What is his salary per pay period?
Solution
To find the salary per pay period, we need to divide the annual pay by the number of pay periods in a year. Note that Bloomfeld gets paid only once every 2 weeks (biweekly) rather than once every week. We must therefore divide the number of weeks in a year by 2 to get the number of pay periods in a year.
52 wk/yr ÷ 2 = 26 pay periods/yr
We can now calculate Bloomfeld’s salary per pay period.
Annual salary pay periods/yr = salary/pay period
$40,000 ÷ 26 = $1,538.46

3.23   Determine the salary per pay period, assuming that an employee receives $25,000 per year and is paid monthly.
Solution
Annual salary ÷ pay periods/yr = salary/pay period
$25,000 ÷ 12 mo = $2,083.33

3.24   Mary Cassell’s annual salary is $13,000. What is her weekly salary?
Solution
Annual salary! ÷ pay periods/yr = salary/pay period
$13,000! ÷ 52 wk = $250

3.25 Determine the annual salary of an employee who is paid $897.33 biweekly.
Solution


3.26   Solve the following to the nearest cent:

Solution

If we divide annual salary by the salary per pay period, we get the number of pay periods in a year.

The pay period is weekly, since there are 52 wk in a year.