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Identify The Variables Needed in The Computation of The Overtime - ABM - BM11SW-IIe-8

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214 views

Identify The Variables Needed in The Computation of The Overtime - ABM - BM11SW-IIe-8

Uploaded by

Jaycee Luxe
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Business-Mathematics Module-14 Overtime

To calculate overtime pay, the following variables are typically needed:

1. Regular Hourly Rate (R):

 This is the standard rate of pay for a non-overtime hour worked. It is calculated as the
employee’s salary divided by the total hours worked in a regular workweek (e.g., 40 hours).

2. Overtime Hourly Rate (O):

 This is typically a multiplier (often 1.5 times the regular hourly rate in many countries, like the
U.S.) used to calculate the pay for hours worked beyond the regular workweek. For example:
O=R×1.5O = R \times 1.5O=R×1.5
 In some cases, overtime pay might be calculated at different rates depending on the number of
hours worked beyond a certain threshold (e.g., after 12 hours, the rate could increase further).

3. Total Regular Hours Worked (H₁):

 This is the number of hours worked during the regular workweek (typically 40 hours). If the
employee works fewer than 40 hours, this value would be less, and no overtime would apply.

4. Total Overtime Hours Worked (H₂):

 This is the number of hours worked beyond the regular hours. For example, if the standard
workweek is 40 hours and the employee works 50 hours, then the overtime hours worked
would be 10 hours.

5. Total Hours Worked (Hₜ):

 This is the total number of hours the employee has worked during the pay period, including
both regular and overtime hours. If the total is greater than the regular hours (e.g., 50 hours in a
week), the excess hours are considered overtime. Ht=H1+H2

6. Overtime Threshold (if applicable) (T):

 Some jurisdictions or employers may have specific rules regarding when overtime pay kicks in.
For example, some may set a threshold of more than 8 hours per day or more than 40 hours per
week. In this case, the overtime pay would only apply after the threshold is exceeded.

7. Overtime Premium (P) (optional):

 This may be an additional multiplier in cases of more extreme overtime hours (e.g., double-time
pay for work on holidays or excessive overtime hours). For example, double time could apply if
an employee works more than 12 hours in a day or during holidays.
Formula to Calculate Overtime Pay:

1. Calculate Regular Pay:

Regular Pay=H1 × R

2. Calculate Overtime Pay:

Overtime Pay=H2 × O

where O is the overtime hourly rate.

3. Calculate Total Pay:

Total Pay = Regular Pay + Overtime Pay

Example:

 Regular hourly rate (R): 15


 Overtime rate (O): 22.50 (1.5x regular rate)
 Regular hours worked (H₁): 40 hours
 Overtime hours worked (H₂): 10 hours

1. Regular Pay:

40 hours×15=600

2. Overtime Pay:

10 hours×22.50=225

3. Total Pay:

600+225=825

In this case, the employee would earn 825 for the 50 hours worked in that week.

The exact method may vary depending on local laws, company policies, or the employee’s
contract. Always refer to specific rules governing overtime in the relevant jurisdiction.

The key variables needed to compute overtime pay are:


1. Regular Hourly Rate (R): The employee's standard hourly wage for regular hours
worked.
2. Overtime Hourly Rate (O): The rate at which overtime hours are paid, typically 1.5
times the regular hourly rate (R) or another multiplier.
3. Regular Hours Worked (H₁): The number of hours worked within the standard
workweek (typically 40 hours).
4. Overtime Hours Worked (H₂): The number of hours worked beyond the regular
workweek, usually eligible for overtime pay.
5. Total Hours Worked (Hₜ): The total number of hours worked during the pay period,
including both regular and overtime hours.
6. Overtime Threshold (T) (if applicable): The point at which overtime pay kicks in (e.g.,
after 40 hours per week or after 8 hours per day).
7. Overtime Premium (P) (optional): An additional multiplier for extreme overtime
conditions (e.g., double-time pay for holiday work).

These are the primary variables you need to calculate overtime pay.

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