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 1.3% and the state unemployment tax rate is 3.5%. Barbara's wages, including the current pay period, will not exceed the limits for Social Security, Medicare and unemployment taxes. Barbara earns $17 per hour and worked 45 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

Normal wage rate = $17 per hour

Overtime wage rate =$17 × 150%= $25.50 per hour

Barbara Normal income = 40 × 17 = 680

Barbara Overtime Income = 5 × 25.5 = 127.50

Total earnings = 680 + 127.50 = 807.50

Social Security tax = 807.50 × 6.2% = 50.065

Medicare taxes = 807.50× 1.45% = 11.708

Federal unemployment tax = 807.5 × 1.3% = 10.4975

State unemployment tax = 807.5 × 3.5%= 28.262

Total payroll expense for Barbara company is total of all taxes including extra $220 federal income taxes i. e $50.065 + $ 11.708 + $ 10.495 + $ 28.265 = 100.533

Therefore, $100.533 will be the total payroll expense for the company