Question

9. Jerry is an employee of Baltimore Company. Baltimore Company pays employees the Friday after the wages are earned. Overtime in excess of 40 hours must be paid at 150% of the normal hourly rate. Social Security taxes are 6.2% and Medicare taxes are 1.45%. The federal unemployment tax rate is 1.0% and the state unemployment tax rate is 4.5%. Jerry’s wages, including the current pay period, will not exceed the limits for Social Security, Medicare and unemployment taxes. Jerry earns $19 per hour and worked 50 hours for the week ended January 13, 2019. Baltimore will withhold $220 federal income taxes. Use this information to determine the total payroll tax expense for Baltimore Company as related to Jerry’s earnings. (Round to the closest cent)

Answer 1

Answer: $137.42

.

.

Working note 1 - Calculation of Overtime wage rate
Normal hourly rate	$19.00
Overtime rate     [$19 x 150%]	$28.50

.

.

Working Note 2 - Calculation of Gross pay
Hour worked	50
Normal wages:
Normal hours                 (a)	40
Normal hourly rate        (b)	$19
Normal wages               (c = a x b)	$760
Overtime wages:
Overtimes hours         [50 - 40 hours]                (d)	10
Overtime wage rate   [Refer working note 1]     (e)	$28.50
Overtime wages                                                 (f = d x e)	$285
Gross pay   [Normal wages + Overtime wages = c + f]	$1,045

.

.

Working note 3 - Calculation of payroll tax expense:
Social security tax                     [Gross pay x $6.20% = 1,045 x 6.2%]	$64.7900
Medicare tax                             [Gross pay x 1.45% = $1,045 x 1.45%]	$15.1525
Federal unemployment tax         [Gross pay x 1.10% = $1,045 x 1%]	$10.4500
State unemployment tax              [Gross pay x 3% = $1,045 x 4.50%]	$47.0250
Total payroll tax expense	$137.4175