Oracle Fast Formulas - Chapter 47: Fast Formula for Annual Bonus Calculation

 Chapter 47: Fast Formula for Annual Bonus Calculation

Overview:

This formula calculates the annual bonus based on the employee’s annual salary and the bonus percentage defined by company policy.

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Business Logic:

• Bonus = Annual Salary × Bonus Percentage

• The formula allows dynamic bonus percentages (e.g., 10%, 15%).

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Inputs Required:

• ANNUAL_SALARY: Employee’s yearly salary

• BONUS_PERCENTAGE: Percentage of the bonus (as a number, e.g., 10 for 10%)

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Sample Formula:

DEFAULT FOR ANNUAL_SALARY IS 0
DEFAULT FOR BONUS_PERCENTAGE IS 0

INPUTS ARE ANNUAL_SALARY, BONUS_PERCENTAGE

BONUS_AMOUNT = (ANNUAL_SALARY * BONUS_PERCENTAGE) / 100

RETURN BONUS_AMOUNT

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Use Case Example:

• Annual Salary: ₹10,00,000

• Bonus Percentage: 15
  → Bonus Amount: ₹10,00,000 × 15% = ₹1,50,000

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Best Practices:

• Ensure BONUS_PERCENTAGE is managed via element entries or fast formula inputs.

• Apply proper proration if the employee hasn't worked a full year.

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Practice Quiz:

1. What happens if the bonus percentage is 0?

2. How can you extend the formula to include proration for partial-year employees?

3. How is the bonus amount taxed in Oracle Payroll?