Leaving Cert Arithmetic Notes

Transcription

1 Leaving Cert Arithmetic Notes Income Tax PRSI & USC Wage the amount you are paid based on the hours you work Salary the amount you are paid regardless of the number of hours worked. You are paid the same amount of money each week even if you work less hours than the week before. Gross pay/income money earned before deductions are made (e.g. Tax or Income Levy) Net pay/income money received after all deductions are made Income Tax (PAYE Pay As You Earn). PAYE tax is used to pay for public services e.g. Gardaí, hospitals, education, roads There are two rates of income tax: Standard Rate 20%; Higher Rate 41% Standard Rate Cut Off Point - The amount up to which an employee is taxed at the standard rate Gross Tax - The amount of tax owed before tax credits are deducted Pay Related Social Insurance (PRSI). PRSI is used to fund old age pensions, job seekers allowance, and child benefit. PRSI is a statutory deduction that everyone must pay out of their income. It is used by the government to fund old-age pensions, jobseeker s benefit & allowance and child benefit. The amount you pay depends on your earnings & which PRSI class you fall into. There are 11 different PRSI classes or rates of contribution. The class you are in depends on the type of job you have. Most people are in class A. The other classes are B,C,D,E,H,J,K,M,P & S. Anyone in these classes pay a lower PRSI & as a result are entitled to less of social insurance payments. PRSI & PAYE are statutory deductions they are payments which must be made to the government & are deducted at source. Non statutory deductions are things like healthcare payments, union subscription, pension payments Tax Credits - A sum deducted from the total amount of gross tax a tax payer owes the state. A person is entitled to tax credits depending on personal circumstances e.g. Single or Married. Tax Payable = Gross tax tax credit USC Universal Social Charge. You don t pay any USC if your income is below 10,036. Once you go over the threshold of 10,036 you pay USC on all your income. USC is not charged on social welfare payments maternity benefit or pensions

2 VAT Valued Added Tax VAT is a tax applied by the government on consumer products/spending The VAT rate varies depending on the product/service Compound Interest F Final amount money and the end of the time period. This amount includes interest accumulated P Principle/Starting amount money invested or money borrowed i Interest rate. This has to be rewritten as a decimal if it s given in % form i.e. 5% = 0.05 t Time. Number of years the money is borrowed or invested. AER Annual Equivalent Rate When you put your money into a savings account you are given a rate referred to as the annual equivalent rate (AER). You may be investing your money for a number of years but the AER tells you how much interest your money would earn in exactly one year AER shows you the real interest you will have gained on savings or interest based investments at the end of a year. If a bank offers you 4% interest for the first 6 months followed by 2% for the remainder it would be simpler to compare this deal with others if we calculate the AER APR Annual Percentage Rate AER may be referred to as EAR (Equivalent Annual Rate) or CAR (Compound Annual Rate) When a lender (bank/credit union) lends you money there are often other costs involved such as a set up fee. Because of this lenders are expected to tell the borrower what the annual percentage rate is. APR is the interest rate which when added to your loan shows you the real cost of borrowing money Depreciation F Final amount, what the value of the item is now P Principle the starting value of the item i Interest rate, the rate of depreciation t Time.

3 Causes of Depreciation wear & tear; obsolescence; passage of time; extraction NBV Net Book Value. NBV is the value of an item that has depreciated in value. Household Bills Households have many bills including groceries, TV licence fee, gas & electricity. Gas & electricity are two regular bills, their consumption is measured by a meter. These bills are bi monthly. Measured in units kwh for electricity. Gas is measured in volume & then converted to kwh Standing charge this is added to the bill regardless of how many units are used. Ratios If you have to divide a number (i.e. a sum of money) into a ratio add the 2 or 3 numbers in the ratio together if you have to divide a number into a ratio of add. The number your dividing is 9 parts (the total number of parts) from here you can get 1 part by dividing the number by the total number of parts and multiplying separately by each number in the ratio, sometimes you might be told what one part of the ratio is equal to and asked to find the other parts. Example: Copper and Zinc are mixed into the ratio. Copper is ; ; ; ; If you get a ratio in fractions and are asked to express as whole numbers, get the lowest common denominator of the 2 or 3 parts and multiply each term by this. Example: express ; the lowest common denominator is 12 & when you multiply each part by 12 you get Tolerance Any measurement made with a measuring device is an approximation, if two people were to measure an object they could come back with 2 different measurements. The difference between the two measurements is called variation.

4 Tolerance is the greatest range of variation that can be allowed. Distance, Speed & Time Average Speed of 2 journeys add the speeds together and divide by 2 Make sure everything is the same unit all seconds, minutes or hours; metres or kilometres Don t forget units and make sure to have the correct amount of decimal places Materials, Wastage & Labour Direct Costs these are costs directly linked to production including raw materials & labour Indirect Costs these are costs not directly linked to production including rent, electricity & heating. Wastage wastage will be minimised where ever possible by a business, wastage reduces any profit. All businesses will have a certain amount of wastage due to human error & machine faults. Variable costs costs that vary according to the level of output or activity for example sales commission increases the higher the output. Fixed costs costs that are not affected by the level of activity. Fixed costs include rent, this amount is fixed regardless of production levels. Currency Exchange Always put the currency rate you are looking for on the right hand side You will always be charged a commission on your foreign exchange transaction so the bank/credit union/post office will make a profit The currency exchange offered can vary slightly from bank to bank When going on holiday to somewhere outside the eurozone & you want foreign currency the bank is selling it to you When coming back from holiday you may have left over currency which the bank will buy it back from you Percentages: Profit if a product or service is sold for more than it was bought for or cost to produce. Loss if a product or service is sold for less than it was bought for or cost to produce. Selling price the cost price plus profit or loss Cost price the amount the seller bought a product for % profit mark up is the profit expressed as a % of the cost price % profit margin is the profit expressed as a % of the selling price Percentage Profit = Profit is the difference between what something cost and what it was sold for

5 Loss is the difference between what something cost and what it was sold for. Percentage loss applies if the selling price is less than the cost price. Error is the true value minus the estimate value