Question

Calculate Payroll

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

	Consultant:
	Gross pay:		$2810
	Withholding allowance:
	Number of allowances	3
	Amount of allowance	$70
	Total withholding allowance	$210	-$210
	Amount subject to tax		$2600
	Federal tax withholding:
	Base tax		$356.9
	Employee amount subject to tax	$2600
	Less:	-$1796
	Amount subject to 28% tax	$804
	Tax @ 28%		$225.12
	Total tax withholding		$582.02
	Gross pay		$2810
	Withholding:
	Social security tax @6%	$168.6
	Medicare [email protected]%	$42.15
	Federal income tax	$582.02
	Total withholding	$792.77	-$792.77
	Net pay		$2017.23
	Computer programmer:
			Hours	Rate	Pay
		Gross pay:
		Regular earnings	40	$32	$1280
		Overtime earnings	20	$48	$960
				[32*1.5]
		Total gross pay			$2240
		Federal tax withholding calculation
		Gross pay		$2240
		Less:
		Withholding allowance
		Number of allowances	2
		Amount of allowance	$70
		Total withholding allowance	$140	-$140
		Amount subject to tax		$2100
		Federal tax withholding:
	a	Base tax		$356.9
		Employee amount subject to tax	$2100
		Less:	-$1796
		Amount subject to 28% tax	$304
	b	Tax @ 28%		$85.12
	c=a+b	Total tax withholding		$442.02
		Gross pay		$2240
		Withholding:
		Social security tax @6%	$134.4
		Medicare [email protected]%	$33.6
		Federal income tax	$442.02
		Total withholding	$610.02	-$610.02
		Net pay		$1629.98
	Administrator:
			Hours	Rate	Pay
		Gross pay:
		Regular earnings	40	$40	$1600
		Overtime earnings	10	$80	$800
				[40*2]
		Total gross pay			$2400
		Federal tax withholding calculation
		Gross pay		$2400
		Less:
		Withholding allowance
		Number of allowances	1
		Amount of allowance	$70
		Total withholding allowance	$70	-$70
		Amount subject to tax		$2330
		Federal tax withholding:
	a	Base tax		$356.9
		Employee amount subject to tax	$2330
		Less:	-$1796
		Amount subject to 28% tax	$534
	b	Tax @ 28%		$149.52
	c=a+b	Total tax withholding		$506.42
		Gross pay		$2400
		Withholding:
		Social security tax @6%	$144
		Medicare [email protected]%	$36
		Federal income tax	$506.42
		Total withholding	$686.42	-$686.42
		Net pay		$1713.58