How to Calculate Weighted Average Wages

In order to measure employee compensation, it is important to know the employee's wage. In some cases it can be complicated to calculate the wage, because the employee may earn different wages for different work; for example, an employee may perform two different jobs for the company at different rates of pay, or she may earn a different wage for regular and overtime work. To account for this, you should calculate the employee's weighted average wage.

Instructions

1. Multiply the each of the employee's wage rates by the number of hours she works at that rate. For example, if the employee works 10 hours at $15 per hour and 20 hours at $10 per hour, then you would get the resulting figures of $150 and $200, indicating that the employee received $150 at one rate of pay and $200 at another rate.

2. Add up the employee's total pay. For example, if the employee earned two wages, $150 and $200, you would add them to get $350.

3. Divide the employee's total wage by her total hours worked to get the weighted average wage. For example, if she worked 30 hours and earned a total of $350, then her weighted average wage would be $11.67 per hour.

References

• "Financial and Management Accounting: An Introduction"; Pauline Weetman; 2010