In: Accounting
Calculate Payroll An employee earns $40 per hour and 1.5 times that rate for all hours in excess of 40 hours per week. Assume that the employee worked 55 hours during the week, and that the gross pay prior to the current week totaled $58,000. Assume further that the social security tax rate was 6.0%, the Medicare tax rate was 1.5%, and federal income tax to be withheld was $575. a. Determine the gross pay for the week. $ If applicable, round your final answer to two decimal places. b. Determine the net pay for the week. $
As per Fair Labor Standards Act (FLSA), Unless exempt , employees must receive overtime pay for hours worked over 40 hours in a workweek.
Total Number of hours worked = 55 hours
Regular hours worked = 40 hours
Overtime hours worked = 55 hours - 40 hours = 15 hours
Regular pay rate = $40 per Hour
Overtime pay rate = 1.5 times of the regular rate = $40 per hour x 1.5 = $60
a. Calculation of Gross Pay
Amount | ||
a. Normal wages | 40 hours x $40 | $1,600 |
b. Overtime wages | 15 hours x $60 | $960 |
c. Gross pay (a + b) | $2,560 |
b. Calculation of Net pay
Federal Insurane Contribution Act is the federal law that requires an employer to withhold Social security tax and Medicare tax from the employees pay check. These both taxes are collectively known as FICA taxes.
Social Security tax rate - 6.0% of gross wages
Medicare tax - 1.5% of gross wages
Gross Pay | $2,560 | |
Less: Federal Income tax withholdoing | $575 | |
Less: Social security tax @6% | $2,560 x 6% | $153.60 |
Less: <Medicare tax @1.5% | $2,560 x 1.5% | $38.40 |
Net pay for the week | $1,793 |