Question

The table below shows the typical hours worked by employees at a company. A new employee is offered an annual salary of $37,000. Hourly employees get paid $14 per hour, but get $21 per hour for each hour over 40 hours. Should the new employee choose the salaried or hourly pay? Explain your reasoning.

Sun.
Mon.
Tues.
Wed.
Thurs.
Fri.
Sat.
0
8.5
9.5
7.5
8
8.5
4

a.
$1.25
b.
$1.50
c.
$1.75
d.
$2.00

Answer 1

Salaried pay is preferable for a new employee

Explanation:

As per table, hours worked per week:

• 0+ 8.5+ 9.5+ 7.5+ 8+ 8.5+ 4 = 46

Employee gets paid for 46 hours per week:

• $40*14 + (46- 40)*$21 = $686

Average yearly salary would be:

• $686/7*365 = $35770

Comparing with annual salary, we see:

• $37000 > $35770

As we see, hourly employees get paid less, so the new employee should choose annual salary option