This question discusses Payroll Administration and Management.
Please note that based on the information provided, the weekly gross is K 6,860 the Net Pay is K 4,957 while the monthly Net Pay is K19,828.00.
Payroll Administration and Management is the activity involved in making sure that the compensation and benefits of the employee for the period that they have spent working are well organized, computed, and administered.
The steps to the solution is given below:
1) Note that the information given above is for one week.
The rate per hour is: K125/Hour.
The rate for overtime is 1.5 of the normal rate
Performance Bonus is K45 for every 50 units.
Given the above, the gross pay for the week is:
Normal Pay + Overtime Pay + Performance Bonus Pay.
a) Normal Pay is given as 125 * 40 = K5,000
b) Overtime Pay is given as (125*1.5) * 8 = K 1,500
c) Performance bonus is given as 45 * (400/50) = K360
d) Total Gross therefore is given as 5,000 + 1,500 + 360 = K 6,860
If gross pay is $6,860, Net Pay is calculated by removing deductions.
Deductions are:
Pension fund = 7.5% of K 6,869 = K 514.5
PAYE Tax = 20% of (95% of 6,869) = K 1,310.24 This is because medical aid is non-taxable.
Employee Insurance = 1% of K 6,860= K 68.6
Union Membership = K 10
The Total Deduction, thus, is = 514.5 + 1,310.24 + 68.6 +10 = K 1,903.34
The Net pay = Gross Pay Less Deductibles
= 6,860 - 1,903
Thus The Net pay = K 4,957 /Week.
Therefore, his monthly net wage will be:
4, 957* 4 = K19,828.00/Month
B) The kind of remuneration method used by company XYZ is
Time Rate System. Under the time rate system, the worker is paid per hour, per day, per week, or per month.
It is normally used for workers who are engaged in highly skilled jobs or highly skilled services, for example, equipment testing, inspection of operations, toolmaking, etc.
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