Pro-Rata
Categories: Accounting
When amateur rata hits the big leagues.
"Pro-rata" just means that something is worked out proportionally. You have something that is settled at a fixed price for a certain amount. A dozen eggs costs $3. You and your brother are going to split a dozen. He's going to take eight; you just want four. How much of the $3 is your share? Pro-rata lets you figure it out. (You owe $1, by the way).
Another example: you get paid a flat fee of $5,000 a month. On June 25, you get in a screaming fight with your boss, dump a wheatgrass smoothie over his head, and storm out of the office. Probably needless to say, but your services will no longer be required. However, they still owe you for the days you worked.
To figure out what you owe, they will use a pro-rata method. They will pay you a proportional amount. You worked 25/30 days, so you’ll be paid 83.3% of your normal salary. So, instead of your usual $5,000, your final check will be $4,166.67.
