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	$4,000 per week		$60 per hour		$50 per hour
Overtime earnings rate*	Not applicable		1.5 times hourly rate		2 times hourly rate
Number of withholding allowances	2		1		2
*For hourly employees, overtime is paid for hours worked in excess of 40 hours per week.

For the current pay period, the computer programmer worked 50 hours and the administrator worked 48 hours. The federal income tax withheld for all three employees, who are single, can be determined from the wage bracket withholding table in Exhibit 2. Assume further that the social security tax rate was 6.0%, the Medicare tax rate was 1.5%, and one withholding allowance is $75.

Determine the gross pay and the net pay for each of the three employees for the current pay period. If required, round your answers to two decimal places.

	Consultant	Computer Programmer	Administrator
Gross pay	$4,000	$3,300	$2,800
Net pay	$fill in the blank 4	$fill in the blank 5	$fill in the blank 6

Answer 1

Ans: For Consultant:

Gross pay{Given}: 4,000 per week

Withholding Allowance= $150 { for two}

Social Security Tax= 6% of $4,000: 240

Medicare tax= 1.5% of $4,000: 60

Net Pay= Gross Pay- Federal Income tax withheld- Social Security Tax- Medicare Tax

=> 4,000-150-240-60

=> $3,550

2. For Computer Programmer:

Worked Hours= 50

Regular Hours= 40

Wage rate= 60 hourly Rate

Overtime pay= 1.5 times

Gross pay= pay for 40 hours+ overtime pay for 10 hours

=> 40*60+ {50-40}*1.5*60

=> 2,400+ 900

=> 3,300

Net pay= Gross Pay- Federal Income tax withheld- Social Security Tax- Medicare Tax

=> 3,300-75- {3,300*6%}-{3,300*1.5%}

=> 3,300- 75- 198- 49.50

=> 2,977.50

3. For Administrator:

Worked Hours= 48

Regular Hours= 40

Wage rate= 50 hourly Rate

Overtime pay= 2 times

Gross pay= pay for 40 hours+ overtime pay for 25 hours

=> 40*50+ {48-40}*2*50

=> 2,000+ 800

=> 2,800

Net pay= Gross Pay- Federal Income tax withheld- Social Security Tax- Medicare Tax

=> 2,800- 2*175- {2,800*6%}-{2,800*1.5%}

=> 2,800- 150- 168- 42

=> 2,440