Question

Barbara 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 1.1% and the state unemployment tax rate is 3.0%. Barbara's wages, including the current pay period, will not exceed the limits for Social Security, Medicare and unemployment taxes. Barbara earns $15 per hour and worked 49 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 Barbara's earnings. (Round to the closest cent)

Answer 1

Total payroll tax expense = $94.29   

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Calculation of Overtime wage rate
Normal hourly rate	$15.00
Overtime rate     [$15 x 150%]	$22.50

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Calculation of Gross pay
Hour worked	49
Normal wages:
Normal hours                 (a)	40
Normal hourly rate        (b)	$15
Normal wages               (c = a x b)	$600
Overtime wages:
Overtimes hours         [49 - 40 hours]                (d)	9
Overtime wage rate   [calculated above] (e)	$22.50
Overtime wages                                                 (f = d x e)	$202.50
Gross pay   [Normal wages + Overtime wages = c + f]	$802.50

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Calculation of payroll tax expense:
Social security tax                     [Gross pay x $6.20% = 802.50 x 6.2%]	$49.75500
Medicare tax                             [Gross pay x 1.45% = $802.50 x 1.45%]	$11.63625
Federal unemployment tax         [Gross pay x 1.10% = $802.50 x 1.10%]	$8.82750
State unemployment tax              [Gross pay x 3% = $802.50 x 3%]	$24.07500
Total payroll tax expense	$94.29375