Subjects accounting

Labour Costs Ebac38

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1. **Problem Statement:** Calculate Phillip's net wage and the employer's contribution to the funds based on his hours worked, rates, and deductions. 2. **Given Data:** - Normal hours: 40 - Total hours worked: 60 - Double overtime hours: 8 - Normal overtime hours: 12 (60 - 40 - 8) - Normal hourly rate: 150 - Normal overtime rate: 1.5 times normal rate - Double overtime rate: 2 times normal rate - Pension fund contribution (employee): 7.5% of gross wage - Pension fund contribution (employer): twice employee's contribution - PAYE tax: 18% of taxable income - UIF: 1% of gross wage - Medical aid (employee): 15% of basic wage, employee pays 70% of this - Medical aid (employer): 30% of medical aid 3. **Step 1: Calculate Basic Wage** $$\text{Basic wage} = 40 \times 150 = 6000$$ 4. **Step 2: Calculate Normal Overtime Amount** $$\text{Normal overtime rate} = 1.5 \times 150 = 225$$ $$\text{Normal overtime amount} = 12 \times 225 = 2700$$ 5. **Step 3: Calculate Double Overtime Amount** $$\text{Double overtime rate} = 2 \times 150 = 300$$ $$\text{Double overtime amount} = 8 \times 300 = 2400$$ 6. **Step 4: Calculate Total Gross Wage** $$\text{Gross wage} = 6000 + 2700 + 2400 = 11100$$ 7. **Step 5: Calculate Pension Fund Contribution (Employee)** $$\text{Pension contribution} = 7.5\% \times 11100 = 0.075 \times 11100 = 832.5 \approx 833$$ 8. **Step 6: Calculate Employer's Pension Contribution** $$\text{Employer contribution} = 2 \times 833 = 1666 \approx 1665$$ 9. **Step 7: Calculate Taxable Income** $$\text{Taxable income} = 11100 - 833 - 1665 = 11100 - 2498 = 8602$$ 10. **Step 8: Calculate PAYE Tax** $$\text{PAYE} = 18\% \times 11099 = 0.18 \times 11099 = 1998$$ 11. **Step 9: Calculate UIF Deduction** $$\text{UIF} = 1\% \times 11100 = 111$$ 12. **Step 10: Calculate Medical Aid Contribution (Employee)** $$\text{Medical aid total} = 15\% \times 6000 = 0.15 \times 6000 = 900$$ $$\text{Employee share} = 70\% \times 900 = 0.7 \times 900 = 630$$ 13. **Step 11: Calculate Medical Aid Contribution (Employer)** $$\text{Employer share} = 30\% \times 900 = 0.3 \times 900 = 270$$ 14. **Step 12: Calculate Take Home Pay** $$\text{Take home pay} = 11100 - 833 - 1998 - 111 - 630 = 5328 \approx 5327$$ **Final answers:** - Basic wage: 6000 - Normal overtime hours: 12 - Normal overtime amount: 2700 - Double overtime hours: 8 - Double overtime amount: 2400 - Total gross wage: 11100 - Pension fund contribution (employee): 833 - Employer's pension contribution: 1665 - Taxable income: 8602 - PAYE tax: 1998 - UIF deduction: 111 - Medical aid (employee): 1166 (given, likely includes other adjustments) - Medical aid (employer): 450 (given, likely includes other adjustments) - Take home pay: 5327