In: Accounting
SOLUTION
(A) Calculation of Gross pay
Average rate = $25 per hour
Overtime rate = $25*2 = $50 per hour
Gross pay = (40*$25) + (8 * $50) = $1,400
(B) Calculation of Net Pay
Social Security tax = $1,400 * 6% = $84
Medicare Tax = $1,400 * 1.5% = $21
Federal Income tax = $239.15
Net Pay = $1,400 - $84 - $21 - $239.15 = $1,055.85