Question

Calculate Payroll

2. Breakin Away Company has three employees-a consultant, a computer programmer, and an administrator. The following payroll information is available for each employee:

	Consultant		Computer Programmer		Administrator
Regular earnings rate	$2,810 per week		$32 per hour		$40 per hour
Overtime earnings rate	Not applicable		1.5 times hourly rate		2 times hourly rate
Number of withholding allowances	3		2		1

For the current pay period, the computer programmer worked 60 hours and the administrator worked 50 hours. The federal income tax withheld for all three employees, who are single, can be determined by adding $356.90 to 28% of the difference between the employee's amount subject to withholding and $1,796.00. Assume further that the social security tax rate was 6%, the Medicare tax rate was 1.5%, and one withholding allowance is $70.

Determine the gross pay and the net pay for each of the three employees for the current pay period. Assume the normal working hours in a week are 40 hours. If required, round your answers to two decimal places.

	Consultant	Computer Programmer	Administrator
Gross pay	$	$	$
Net pay	$	$	$

Answer 1

Calculation of Gross pay

Gross pay = Regular pay + over time pay

For the following it is as

Consultant $2810 + $0 = $2810

Computer Programmer $32*40 hrs + 32*20*1.5 = 1280+960=$2240

Administrator $40*40 + $40*10*2 = $1600+$800 = $2400

Computation of Federal incometax with holding

Description	consultant	computer programmer	Administrator
1. Gross weekly pay	2810	2240	2400
No. Of withholdings allowances	3	2	1
Value of one allowance	70	70	70
2.Amount to be deducted	210	140	70
Amount subject to withholding (1-2)	2600	2100	2330
Initial withhold	356.90	356.90	356.90
Bracket % over bracket excess	(2600-1796)*28% =225.12	85.12	149.52
Amount withhold (Initial Withholding +bracket % over bracket excess)	582.02	442.02	506.42

Calculation of Net pay

Particulars	consultant	computer programmer	Administrator
Gross pay	2810	2240	2400
Less: deductions
Federal ITWH	582.02	442.02	506.42
SST(Grosspay*6%)	168.6	134.4	144
Medicare Tax @1.5%	42.15	33.3	36
Net Pay	2017.23	1630.28	1713.58