An employee works 60 hours in one week. If the hourly wage rate is $18, what are the gross wages?

An employee works 60 hours in one week. If the hourly wage rate is $18, what are the gross wages?

• A. $1,080
• B. $1,260
• C. $1,440
• D. $1,800

Answer: (B)

The main idea is to include overtime pay when hours exceed 40 in a week. Hours beyond 40 are paid at 1.5 times the regular rate. Regular pay for the first 40 hours: 40 × 18 = 720. Overtime pay for the remaining 20 hours: 20 × (18 × 1.5) = 20 × 27 = 540. Total gross wages: 720 + 540 = 1,260. So the gross wages are $1,260. If you only multiplied hours by the base rate, you’d get 1,080, which misses the overtime compensation.

The main idea is to include overtime pay when hours exceed 40 in a week. Hours beyond 40 are paid at 1.5 times the regular rate.

Regular pay for the first 40 hours: 40 × 18 = 720.

Overtime pay for the remaining 20 hours: 20 × (18 × 1.5) = 20 × 27 = 540.

Total gross wages: 720 + 540 = 1,260.

So the gross wages are $1,260. If you only multiplied hours by the base rate, you’d get 1,080, which misses the overtime compensation.