Gross and Net
Earnings
Business Mathematics
Objectives:
You are expected to:
1. Define salary, wage, income, benefits.
(ABM_BMIISW-IIc-1)
2. Compute gross and net earnings. (ABM_BMIISW-
IId-2)
Gross and Net Earnings 2
DIRECTIONS: Below are jumbled letters.
Identify the hidden words and list them down
on a separate sheet of paper.
SALARY, WAGE,
INCOME, AND BENEFIT
I. SALARY
I. SALARY – is a fixed regular payment, typically
paid on a monthly or annually basis. Sometimes,
salaries on an annual basis is converted into
monthly basis, weekly to monthly, monthly to
semi-monthly, etc.
Remember the following:
1 year = 12 months = 24 semi-monthly = 6 bi-monthly
1 year = 52 weeks = 26 bi-weekly
1 month = 2 semi-monthly
2
Semi-monthly = every month
5
Bi-monthly = every two months
Bi-weekly = every two weeks
Example:
Supposedly the annual salary is Php154,500.
𝐴𝑛𝑛𝑢𝑎𝑙 𝑆𝑎𝑙𝑎𝑟𝑦 154,500
1. Monthly salary = = = Php 12,875
12 12
𝐴𝑛𝑛𝑢𝑎𝑙 𝑆𝑎𝑙𝑎𝑟𝑦 154,500
2. Semi-monthly = = = Php 6,437.50
24 24
salary
𝑀𝑜𝑛𝑡ℎ𝑙𝑦 𝑆𝑎𝑙𝑎𝑟𝑦 12,875
= = = Php 6,437.50
2 2
Example:
Supposedly the annual salary is Php154,500.
𝐴𝑛𝑛𝑢𝑎𝑙 𝑆𝑎𝑙𝑎𝑟𝑦 154,500
3. Weekly salary = = = Php 2,971.15
52 52
𝐴𝑛𝑛𝑢𝑎𝑙 𝑆𝑎𝑙𝑎𝑟𝑦 154,500
4. Bi-weekly salary = = = Php 5,942.31
26 26
= Weekly salary x 2 = Php2,971.15 x 2 = Php5,942.3
II. WAGE
II. WAGE – is a fixed regular payment received by a
worker for labor or services according to a contract
that is usually on a piecework, hourly or daily basis.
A. Piece Rate
A worker employed on a piecework basis is paid in
proportion to the quantity of work he or she finishes.
1. Fixed piece-rate plan- the rate is fixed
irrespective of the quantity produced.
Fixed piece-rate plan- Example:
Kim is working in an accessory shop. She is paid on
a per-piece basis at the rate of Php15 per piece. If she
finishes 140 accessories in a week, how much is her total
earnings?
Given: Rate = Php15 per piece
Quantity Produced = 140 pieces (base)
Find: Total Earnings Solution:
Total Earnings = Quantity x Rate
= 140 x Php15 = Php2,100
2. Differential piece-work plan- the rate gradually
increases as the quantity produced also increases.
Example: Grace works in her friend’s business wherein
she was tasked to repack and seal gummy bears. She
is paid on the following differential pay plan schedule:
2. Differential piece-work plan- Example
Compute for Grace’s
total wage for the
week if she repacked
the following
quantities:
DAY QUANTITY RATE AMOUNT
(Quantity x Rate)
𝑃ℎ𝑝 100
MONDAY 92 100
𝑃ℎ𝑝 92.00
𝑃ℎ𝑝 105
TUESDAY 105 Php 110.25
100
𝑃ℎ𝑝 105
WEDNESDAY 143 Php 150.15
100
𝑃ℎ𝑝 110
THURSDAY 176 Php 193.60
100
𝑃ℎ𝑝 115
FRIDAY 201 Php 231.15
100
B. Hourly or Daily Basis
Many of the employees are usually paid on an
hourly basis. In computing for the daily pay, we
simply multiply the number of hours of work by the
hourly rate.
According to the Article 83 of the Labor Code, the
normal hours of work of any employee shall not exceed
eight (8) hours a day.
B. Hourly or Daily Basis
Example:
Simon works in a factory that pays him
an hourly rate of Php45.50. How much is his daily
wage if he works for 8 hours a day?
Solution:
Daily wage = number of working hours x hourly rate
= 8 x Php45.50
= Php364
III. INCOME
III. INCOME - It is the money earned by working or
through investment. Here are some examples of
income:
• Salary and wages
• Commissions
• Income for properties if it is rented out
• Dividend income for stockholders
• Profit of the business owned
• Royalties if they are authors
IV. EMPLOYEE BENEFITS
IV. EMPLOYEE BENEFITS - a payment of gift made by
an employer, the state, or an insurance company.
The following are some of the benefits in the
Philippines given to the employees:
• Vacation Pay and Sick Leaves
• Medical and Hospitalization Benefits
• Meal Allowance
• Transportation Allowance
• Clothing Allowance
• Incentive Pay for Productivity
Consider the chart below.
From the figure, it
can be seen that in
Mr. Reyes’ payslip,
there are three parts
namely the Gross
Earnings, Total
Deductions, and Net
Pay.
By looking closer into the figures, we can see that,
Php27,232.00 - Php6,308.00 = Php18,924.00
Through this, we can say that
Net Pay = Gross Earnings – Total Deductions
E–D=N
In Mr. Reyes’ pay slip, it can be noticed that the
words “gross earnings”, “deductions” and “net”
appears. When we say,.
“Gross earnings” - it is the amount gained by the
worker without any deduction
“Net pay” or “net earning” - means the amount
received less deductions of any employee.
“Deductions” - are the amount held by any authority
as a form of payment for some necessary dues like
taxes, loans, health insurances, absences, etc.
Example:
Problem 1: Marissa has a monthly total earning
amounting to Php20,532.16. If she received a total
deduction of Php3,210.00. How much is her net
earnings?
Solution: Net Earnings = Gross Earning – Deductions
N=E–D
N = Php20,532.16 - Php3,210.00
N = Php17,322.16
Problem 2: John’s net pay is Php14,975.68. If
his total deduction is Php1,962.05, how much is
his gross earnings?
Solution: E=N+D
E = Php14,975.68 + Php1,962.05
E = Php16,937.73
A. DIRECTIONS: Complete the following table on a
separate sheet of paper. Round off your answer to
the nearest centavo. Show your solution below the
table.
DIRECTIONS: Analyze the
table below. On a separate
sheet of paper, write your
answers to the questions
below
Questions:
1. How much is Ms. Tolentino’s
gross earnings?
2. How much is her total
deductions?
3. After subtracting the
deductions to the gross
earnings, how much is her
net earnings? 27
