Confused with a practice question (picture included)

RosieCarlisle
RosieCarlisle Registered Posts: 60
edited June 2015 in AAT Level 3 (Level 6 in Scotland)


I hope the above image works! Basically I'm working on Costs and Revenues and attempting the above question from the Osborne tutorial book. You can see my original calculations crossed out, and the given answers written in.

I'm sure there's just something obvious I'm missing and the penny will drop eventually; but all we've been taught so far is to calculate basic pay INCLUDING overtime hours, and then calculate just the added premium of the overtime (for example, equivalent to half of basic pay).

The way it's written in the image, though, it says 512 hours were worked, but it's only worked out basic rate for 464 of those hours. Then it's calculated just the premium for the overtime hours - so surely the 48 (30+18) hours of overtime haven't been fully calculated? Haven't they missed the basic rate calculation for these hours?

Any help appreciated!

Comments

  • CeeJaySix
    CeeJaySix Registered Posts: 645
    Overtime hours are included in the 464 according to the brackets. I think the 512 is a red herring that shouldn't really be there.
  • RosieCarlisle
    RosieCarlisle Registered Posts: 60
    It would actually make much more sense if the 512 hours was the incorrect part - although they've made the exact same (possible) error in the workbook, too.
  • CeeJaySix
    CeeJaySix Registered Posts: 645
    Certainly odd, but that's how they've calculated the answer.
  • KarenMustardTutor
    KarenMustardTutor Registered, Tutor Posts: 28
    I agree with CeeJay Six
    the Basic pay hours includes the overtime. The 512 should really not be there and should be greyed out. The question would make more sense then
    Karen
  • Kkadijat
    Kkadijat Registered Posts: 28
    The 512 is absolutely correct. This is used only to calculate a payment, the total/ actual hour worked is 416 hours.

    The 464 already included OP rate 1 and 2 hence the actual hours pay is 416 which is £4160 on a basic pay. OP rate 1 and 2 is 48 hours altogether.

    464 - 48 (OP rate 1 and 2) = 416, SO 416 *£10 = £4160 ( BASIC RATE PAY WITHOUT OVERTIME PREMIUM)

    OVERTIME RATE 1 is 30*12.50 ( BASIC RATE and a QUARTER)= £375
    OVERTIME RATE 2 is 18 * £15 (BASIC RATE and a HALF) = £645

    So TOTAL PAY IS £4160 + £375 + £645 = £4805

    But because the BASIC RATE of overtime worked is included in the BASIC PAY then we will have 416 (BASIC HOUR WORKED) + 48 ( BASIC HOUR OVERTIME ) = 464
    464* 10 = £4640
    30*£2.50 (OVERTIME PREMIUM ie a QUARTER OF BASIC PAY WITHOUT BASIC PAY) = 75
    18* £5 ( OVERTIME PREMIUM ie HALF OF BASIC PAY WITHOUT BASIC PAY) = £90

    SO, £4640 + £75 + £90 = £4805

    Hope someone finds this useful.

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