DataSpan, Inc., automated its plant at the start of the current year and installed a flexible manufacturing system. The company is also evaluating its suppliers and moving toward Lean Production. Many adjustment problems have been encountered, including problems relating to performance measurement. After much study, the company has decided to use the performance measures below, and it has gathered data relating to these measures for the first four months of operations.

	Month
	1	2	3	4
Throughput time (days)	?	?	?	?
Delivery cycle time (days)	?	?	?	?
Manufacturing cycle efficiency (MCE)	?	?	?	?
Percentage of on-time deliveries	75%	76%	81%	88%
Total sales (units)	10,510	10,560	10,560	10,550

Management has asked for your help in computing throughput time, delivery cycle time, and MCE. The following average times have been logged over the last four months:

	Average per Month (in days)
	1		2		3		4
Move time per unit	0.5		0.4		0.8		0.5
Process time per unit	0.6		0.4		0.8		0.7
Wait time per order before start of production	9.2		8.0		5.0		4.0
Queue time per unit	3.2		3.8		2.5		1.7
Inspection time per unit	0.7		0.7		0.5		0.8

Required:

1-a. Compute the throughput time for each month. (Round your answers to 1 decimal place.)

	Throughput Time
Month 1		days
Month 2		days
Month 3		days
Month 4		days

1-b. Compute the manufacturing cycle efficiency (MCE) for each month. (Round your answers to 1 decimal place.)

	Manufacturing Cycle Efficiency (MCE)
Month 1		%
Month 2		%
Month 3		%
Month 4		%

1-c. Compute the delivery cycle time for each month. (Round your answers to 1 decimal place.)

	Delivery Cycle Time
Month 1		days
Month 2		days
Month 3		days
Month 4		days

3-a. Refer to the move time, process time, and so forth, given for month 4. Assume that in month 5 the move time, process time, and so forth, are the same as in month 4, except that through the use of Lean Production the company is able to completely eliminate the queue time during production. Compute the new throughput time and MCE. (Round your answers to 1 decimal place.)

	Month 5
Throughput time		days
Manufacturing cycle efficiency (MCE)		%

3-b. Refer to the move time, process time, and so forth, given for month 4. Assume in month 6 that the move time, process time, and so forth, are again the same as in month 4, except that the company is able to completely eliminate both the queue time during production and the inspection time. Compute the new throughput time and MCE. (Round your answers to 1 decimal place.)

	Month 6
Throughput time		days
Manufacturing cycle efficiency (MCE)		%

1. A corporate bond has 2 years to maturity, a coupon rate of 8%, a face value of $1,000 and pays coupons semiannually. The market interest rate for similar bonds is 9.5%.

a. What is the bond's duration in years?

b. If yields fall by 0.8 percentage points, what is the new expected bond price based on its duration (in $)?

c. What is the actual bond price after the change in yields (in $)?

d. What is the difference between the two new bond prices (in absolute $)?

2. A corporate pension plan has to make the following payments over the next few years:

Year	1	2	3	4
Amount ($ million)	19	23	29	37

The appropriate interest rate is 8%.

a. What is the duration of the liability?

b. What is the duration of a perpetuity if the yield is 8%?

c. The fund wants to immunize its interest rate risk by investing in a perpetuity and a 1-year zero coupon bond. To do so, how much should it invest in the perpetuity (in $ million)?

Santana Rey created Business Solutions on October 1, 2017. The company has been successful, and its list of customers has grown. To accommodate the growth, the accounting system is modified to set up separate accounts for each customer. The following chart of accounts includes the account number used for each account and any balance as of December 31, 2017. Santana Rey decided to add a fourth digit with a decimal point to the 106 account number that had been used for the single Accounts Receivable account. This change allows the company to continue using the existing chart of accounts. No. Account Title Debit Credit 101 Cash $ 48,522 106.1 Alex’s Engineering Co. 0 106.2 Wildcat Services 0 106.3 Easy Leasing 0 106.4 IFM Co. 3,070 106.5 Liu Corp. 0 106.6 Gomez Co. 2,808 106.7 Delta Co. 0 106.8 KC, Inc. 0 106.9 Dream, Inc. 0 119 Merchandise inventory 0 126 Computer supplies 730 128 Prepaid insurance 1,989 131 Prepaid rent 905 163 Office equipment 8,180 164 Accumulated depreciation—Office equipment $ 220 167 Computer equipment 20,600 168 Accumulated depreciation—Computer equipment 1,100 201 Accounts payable 1,110 210 Wages payable 700 236 Unearned computer services revenue 1,330 301 S. Rey, Capital 82,344 302 S. Rey, Withdrawals 0 403 Computer services revenue 0 413 Sales 0 414 Sales returns and allowances 0 415 Sales discounts 0 502 Cost of goods sold 0 612 Depreciation expense—Office equipment 0 613 Depreciation expense—Computer equipment 0 623 Wages expense 0 637 Insurance expense 0 640 Rent expense 0 652 Computer supplies expense 0 655 Advertising expense 0 676 Mileage expense 0 677 Miscellaneous expenses 0 684 Repairs expense—Computer 0 In response to requests from customers, S. Rey will begin selling computer software. The company will extend credit terms of 1/10, n/30, FOB shipping point, to all customers who purchase this merchandise. However, no cash discount is available on consulting fees. Additional accounts (Nos. 119, 413, 414, 415, and 502) are added to its general ledger to accommodate the company’s new merchandising activities. Also, Business Solutions does not use reversing entries and, therefore, all revenue and expense accounts have zero beginning balances as of January 1, 2018. Its transactions for January through March follow: Jan. 4 The company paid cash to Lyn Addie for five days’ work at the rate of $175 per day. Four of the five days relate to wages payable that were accrued in the prior year. 5 Santana Rey invested an additional $23,300 cash in the company. 7 The company purchased $7,200 of merchandise from Kansas Corp. with terms of 1/10, n/30, FOB shipping point, invoice dated January 7. 9 The company received $2,808 cash from Gomez Co. as full payment on its account. 11 The company completed a five-day project for Alex’s Engineering Co. and billed it $5,450, which is the total price of $6,780 less the advance payment of $1,330. 13 The company sold merchandise with a retail value of $4,000 and a cost of $3,470 to Liu Corp., invoice dated January 13. 15 The company paid $740 cash for freight charges on the merchandise purchased on January 7. 16 The company received $4,050 cash from Delta Co. for computer services provided. 17 The company paid Kansas Corp. for the invoice dated January 7, net of the discount. 20 Liu Corp. returned $600 of defective merchandise from its invoice dated January 13. The returned merchandise, which had a $290 cost, is discarded. (The policy of Business Solutions is to leave the cost of defective products in cost of goods sold.) 22 The company received the balance due from Liu Corp., net of both the discount and the credit for the returned merchandise. 24 The company returned defective merchandise to Kansas Corp. and accepted a credit against future purchases. The defective merchandise invoice cost, net of the discount, was $486. 26 The company purchased $9,500 of merchandise from Kansas Corp. with terms of 1/10, n/30, FOB destination, invoice dated January 26. 26 The company sold merchandise with a $4,620 cost for $5,880 on credit to KC, Inc., invoice dated January 26. 31 The company paid cash to Lyn Addie for 10 days’ work at $175 per day. Feb. 1 The company paid $2,715 cash to Hillside Mall for another three months’ rent in advance. 3 The company paid Kansas Corp. for the balance due, net of the cash discount, less the $486 amount in the credit memorandum. 5 The company paid $430 cash to the local newspaper for an advertising insert in today’s paper. 11 The company received the balance due from Alex’s Engineering Co. for fees billed on January 11. 15 Santana Rey withdrew $4,700 cash from the company for personal use. 23 The company sold merchandise with a $2,460 cost for $3,410 on credit to Delta Co., invoice dated February 23. 26 The company paid cash to Lyn Addie for eight days’ work at $175 per day. 27 The company reimbursed Santana Rey for business automobile mileage (700 miles at $0.32 per mile). Mar. 8 The company purchased $2,850 of computer supplies from Harris Office Products on credit, invoice dated March 8. 9 The company received the balance due from Delta Co. for merchandise sold on February 23. 11 The company paid $860 cash for minor repairs to the company’s computer. 16 The company received $5,260 cash from Dream, Inc., for computing services provided. 19 The company paid the full amount due to Harris Office Products, consisting of amounts created on December 15 (of $1,110) and March 8. 24 The company billed Easy Leasing for $9,177 of computing services provided. 25 The company sold merchandise with a $2,082 cost for $2,820 on credit to Wildcat Services, invoice dated March 25. 30 The company sold merchandise with a $1,168 cost for $2,400 on credit to IFM Company, invoice dated March 30. 31 The company reimbursed Santana Rey for business automobile mileage (1,000 miles at $0.32 per mile). The following additional facts are available for preparing adjustments on March 31 prior to financial statement preparation: The March 31 amount of computer supplies still available totals $2,095. Three more months have expired since the company purchased its annual insurance policy at a $2,652 cost for 12 months of coverage. Lyn Addie has not been paid for seven days of work at the rate of $175 per day. Three months have passed since any prepaid rent has been transferred to expense. The monthly rent expense is $905. Depreciation on the computer equipment for January 1 through March 31 is $1,100. Depreciation on the office equipment for January 1 through March 31 is $220. The March 31 amount of merchandise inventory still available totals $674.

Pockets lent $20,000 to Lego Construction on January 1, 2018. Lego signed a three-year, 5% installment note to be paid in three equal payments at the end of each year.

Required:

(1.)    Prepare the journal entry on January 1, 2018, for Pockets' lending the funds.

(2.)    Calculate the amount of one installment payment.

(3.)    Prepare an amortization schedule for the three-year term of the installment note.

(4.)    Prepare Pockets' journal entry for the first installment payment on December 31, 2018.

(5.)    Prepare Pockets' journal entry for the third installment payment on December 31, 2020.

The Watts Company is a publicly traded corporation that produces different types of commercial food processors. My name is Alan Smith and I have worked for this company for the last ten years in the controller’s office. I was both an accounting and finance major in university. The company currently produces 300 products and does not anticipate any new products coming out over the next three years. I have previously mentioned to my superiors that it is not appropriate for our firm to use a traditional accounting system (where overhead costs are allocated across products at a rate of $100 per direct labor hour) when different products require different amounts of indirect overhead resources. For example, under the traditional system all costs associated with testing of products for quality assurance purposes are part of overhead costs and therefore allocated across products based on direct labor hours. Yet, some of our products require as much as 5 hours of testing whereas some products require less than 1 minute of testing with no connection to direct labor hours. Given that traditional costing systems result in significant cost distortions when determining products costs and given that the firm now has revenues of over $100 million a year, Watts has decided to adopt activity based costing over the next year or two.

Watts’s management has hired Deloitte Consulting to help us implement activity based costing. I will be acting as the liaison between our firm and Deloitte. As part of the initial implementation phase, I have asked Deloitte to derive the costs and product margins associated with two of our products, Classic and Artisan, so that these costs and product margins could be compared with the costs and product margins under our current traditional accounting system. I picked these products since Watts management believe they have very different demands on indirect overhead resources. Further, Classic is sold in large quantities whereas Artisan is sold in small quantities and traditional accounting systems can cause large cost distortions in different directions for products sold in large and small quantities.

Current information from our existing system on a per unit basis is shown in Exhibit 1.

Exhibit 1

	Classic	Artisan
Direct material	$120	$200
Direct labor hours	1.2	1.5
Direct labor wage rate per hour	$20	$20
Sales price per unit	$300	$450

My staff has identified for Deloitte five activity cost pools. Information on those cost pools and the related activity measures are provided in Exhibit 2.

Exhibit 2

	Total Costs	Allocation Base	Level of Allocation Base
Equipment setups	$24,000,000	number of setups	60,000
Purchase orders	$72,000,000	number of purchase orders	300,000
Machining	$25,000,000	number of machine hours	1,250,000
Testing	$42,000,000	number of testing hours	600,000
Packaging and shipping	$50,000,000	number of containers	1,000,000

Although fixed costs are lumped in with variable costs across the five different cost pools, I am aware that machining related costs consists almost exclusively of depreciation costs. Hence, with respect to all questions asked in this case, machining costs will be treated as entirely fixed with respect to machine hours. Each machine is used in the production of multiple product lines. The resale value of machines is only affected by the passage of time and not by how much they are used in a given year.

In all questions asked in this case, the firm will assume that costs associated with equipment setups, purchase orders, testing, and packaging & shipping are variable with respect to their respective activity measures. Currently, we believe our assumptions on cost behavior patterns are quite reasonable.

All products are produced in batches, where the size of a batch differs across products. For example, if we produce 80 units of a product in batch sizes of 40, then the product will be produced in two batches. An equipment setup must be performed before producing each batch of a product. Hence, in the example above, two equipment setups would be performed. Units of product are packaged in containers and sent to distributors.

Production volumes are set equal to sales volumes since the company only produces products that they have orders for. Consequently, the firm never has a beginning or ending work in process inventory, and it does not have a beginning or ending finished goods inventory.

Further information on our two products is provided in Exhibit 3

Exhibit 3

	Classic	Artisan
annual sales and production in units	400,000	50,000
number of units per batch	400	80
number of purchase orders	600	300
number of machine hours per unit	0.4	2
total number of testing hours	8,000	100,000
total number of containers	5,000	20,000

Prepare an income statement for Classic and an income statement for Artisan using activity based costing. (For simplicity, SG&A expenses for the firm are not included in the income statement for the two products.) The income statements should be prepared on a total basis and then show the average net operating income per unit using the following template for guidance:

3) Classic                                     Artisan

Sales                                                                $$$                              $$$     

Direct materials                                  $$$                                   $$$            

Direct labor                                        $$$                                   $$$            

Equipment Setups                              $$$                                   $$$            

Purchase orders                                  $$$                                 $$$            

Machining                                          $$$                                 $$$            

Testing                                               $$$                                 $$$            

Packaging and shipping                      $$$                                 $$$                  

Total Costs                                                      $$$                              $$$                 

Net operating income                                     $$$                              $$$                 

Average net operating income

    per unit                                                        $$$                              $$$

Background:  As a district sales representative for a medical supplies vendor, "Mark Price" sold medical supplies directly to doctors at local hospitals.  

1. Identify the internal control(s) involved for each activity.

2. Describe the internal control you would implement to prevent the fraudulent activity from occurring in the future.

Mark's Activities

a. Mark had a falling-out with his employer and was fired.

Internal Control:

Description of new control:

b. Mark continued to work with his district hospitals as if he were still a representative of the vendor, while his former employer searched for a new sales rep. Mark hand-delivered false invoices printed on stationery he had kept after his termination.

Internal Control:

Description of new control:

c. One hospital refused to pay the false invoices because receipt of the invoiced items could not be verified.

What voucher system document controls were in place at this hospital?

d. Another hospital paid the false invoices, giving the checks directly to Mark when he met them at his usual time, rather than mailing the checks to the supplier.

Internal Control:

Description of new control:

e. Mark endorsed the hospital checks with the name of his former company's cashier and used a "For deposit only" stamp purchased at a local office supply store to stamp each check. He deposited the checks into his personal bank account.

Internal Control:

Description of new control:

Which do you think is more important: the internal auditor or the external auditor?  Why?

1. The Accountant at EZ Toys, Inc. is analyzing the production and costs data for its Trucks

Division. For October, the actual results and the master budget data are presented below.

Actual Results

Budget Data

Produced and sold

10,000

Production and sales

12,000

Unit Selling Price

$15

Unit Selling Price

$15

Variable Costs:

Unit Variable Costs:

Direct materials

$52,800

Direct materials

$5

Direct labor

51,000

Direct labor

4

Variable OH

23,000

Variable OH

2

Total variable Costs $126,800

Total unit variable costs $11

Fixed Overhead

$9,000

Fixed Overhead

$9,600

Required: Prepare a variance analysis to compare actual results and master budget.

2. Required: Use the data above to determine the flexible budget variance and the sales volume

variance.

3. Required: Calculate the direct materials variances for October using the following

Information regarding the use of direct materials at EZ Toys’ Trucks Division for October:

Standard Costs

2 units per truck @ $2.5 per unit

Trucks produced in October = 10,000

Actual Materials purchased and used 22,000 units @ $2.4 per unit

4. Required: Calculate the direct labor variances for October using the following Information

regarding the use of direct labors at EZ Toys’ Trucks Division for October:

Standard Costs

0.4 hours per truck @ $10 per hour

Trucks produced in October = 10,000

Actual Direct Labor costs

Actual hours worked = 5,000 hours

Total actual labor cost = $51,000

Average cost per hour = $10.20

What might be causing these variance

On January 1, 2018, Morris Production leased a machine from Werner Leasing under a finance lease. Lease payments are made annually. Title does not transfer to the lessee and there is no purchase option or guarantee of a residual value by Morris. Portions of the Werner Leasing's lease amortization schedule appear below: Jan. 1 Payments Effective Interest Decrease Outstanding in Balance Balance 374,596 2018 40,000 40,000 334,596 2018 40,000 33,460 6,540 328,056 2019 40,000 32,806 7,194 320,861 2020 40,000 32,086 7,914 312,947 2021 40,000 31,295 8,705 304,242 2022 40,000 30,424 9,576 294,666 2023 40,000 29,467 10,533 284,133 – –– – – – –– – – – –– – – 2035 40,000 9,948 30,052 69,422 2036 40,000 6,942 33,058 36,364 2037 40,000 3,636 36,364 0 Required: 1. What is Morris's lease liability at the beginning of the lease (after the first payment)? 2. What amount would Majestic record as a right-of-use asset? 3. What is the lease term in years? 4. What is the effective annual interest rate? 5. What is the total amount of lease payments? 6. What is the total effective interest expense recorded over the term of the lease?

Hemming Co. reported the following current-year purchases and sales for its only product.
    

Date

Activities

Units Acquired at Cost

Units Sold at Retail

Jan.

1

Beginning inventory

300

units

@ $14.00

=

$

4,200

Jan.

10

Sales

250

units

@ $44.00

Mar.

14

Purchase

520

units

@ $19.00

=

9,880

Mar.

15

Sales

460

units

@ $44.00

July

30

Purchase

500

units

@ $24.00

=

12,000

Oct.

5

Sales

480

units

@ $44.00

Oct.

26

Purchase

200

units

@ $29.00

=

5,800

Totals

1,520

units

$

31,880

1,190

units

Required:
Hemming uses a perpetual inventory system.
  
1. Determine the costs assigned to ending inventory and to cost of goods sold using FIFO.
2. Determine the costs assigned to ending inventory and to cost of goods sold using LIFO.
3. Compute the gross margin for FIFO method and LIFO method.

Fun Toys is a retailer of children’s toys. The Accounts payable department is located at company headquarters in Boston, Massachusetts. The department consists of two full-time clerks and one supervisor. They are responsible for processing and paying approximately 2000 checks every month. The accounts payable process begins with receipt of a purchase order from the purchasing department. The purchase order is held until a receiving report and the vendor’s invoice have been forwarded to accounts payable. At that time, the purchase order, receiving order, and vendor’s invoice are matched together by an accounts payable clerk, and payment and journal entry information are input to the computer. Payments details are designated in the input, and these are based on vendor payment terms. Company policy is to take advantage of any cash discounts offered. If there are any discrepancies among the purchase order, receiving report, and invoice, they are given to supervisor for resolution. After resolving the discrepancies, the supervisor returns the documents to the appropriate clerk for processing. Once documents are matched and payment information is input, the documents are stapled together and filed in a temporary file folder by payment date until checks are issued. When checks are issued, a copy of each check is used as a voucher cover and is affixed to the supporting documentations from the temporary file. The entire voucher is then defaced to avoid duplicated payments. In addition to the check and check copy, other outputs of the computerized accounts payable system are a check register, vendor master list, accrual of open invoices, and a weekly cash requirement forecast. Requirement • Draw a context diagram for the company’s accounts payable process.

Contribution Margin

Sally Company sells 37,000 units at $46 per unit. Variable costs are $26.68 per unit, and fixed costs are $321,700.

Determine (a) the contribution margin ratio, (b) the unit contribution margin, and (c) income from operations.

a. Contribution margin ratio (Enter as a whole number.)		%
b. Unit contribution margin (Round to the nearest cent.)	$	per unit
c. Income from operations	$

Break-Even Point

Radison Enterprises sells a product for $107 per unit. The variable cost is $63 per unit, while fixed costs are $474,320.

Determine (a) the break-even point in sales units and (b) the break-even point if the selling price were increased to $112 per unit.

a. Break-even point in sales units	units
b. Break-even point if the selling price were increased to $112 per unit	units

Target Profit

Outdoors Company sells a product for $160 per unit. The variable cost is $75 per unit, and fixed costs are $374,000.

Determine (a) the break-even point in sales units and (b) the break-even point in sales units required for the company to achieve a target profit of $67,320.

a. Break-even point in sales units		units
b. Break-even point in sales units required for the company to achieve a target profit of $67,320		units

Sales Mix and Break-Even Analysis

Michael Company has fixed costs of $1,600,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products are provided below.

Product	Selling Price		Variable Cost per Unit			Contribution Margin per Unit
Model 94	$790		$530			$260
Model 81	540		400			140

The sales mix for products Model 94 and Model 81 is 50% and 50%, respectively. Determine the break-even point in units of Model 94 and Model 81 of the overall (total) product, E. If required, round your answers to the nearest whole number.

a. Product Model 94_____ units

b. Product Model 81______ units

Operating Leverage

Cartersville Company reports the following data:

Sales	$419,400
Variable costs	260,000
Contribution margin	$159,400
Fixed costs	130,400
Income from operations	$29,000

Determine Cartersville Company's operating leverage. Round your answer to one decimal place.______

Margin of Safety

The Ira Company has sales of $230,000, and the break-even point in sales dollars is $177,100.

Determine the company's margin of safety as a percent of current sales.  ____%

Lonnie Davis has been a general partner in the Highland Partnership for many years and is also a sole proprietor in a separate business. To spend more time focusing on his sole proprietorship, he plans to leave Highland and will receive a liquidating distribution of $72,000 in cash and land with a fair market value of $135,500 (tax basis of $173,000). Immediately before the distribution, Lonnie’s basis in his partnership interest is $448,000, which includes his $79,500 share of partnership debt. The Highland Partnership does not hold any hot assets.

a. What is the amount and character of any gain or loss to Lonnie?

b. What is Lonnie’s basis in the land?
c. What is the amount and character of Lonnie’s gain or loss if he holds the land for 13 months as investment property and then sells it for $163,000?
d. Assume there are no gains from the sale of other Section 1231 in the same tax year. What is the amount and character of Lonnie’s gain or loss if he places the land into service in his sole proprietorship and then sells it 13 months later for $163,000?

Coolplay Corp. is thinking about opening a soccer camp in southern California. To start the camp, Coolplay would need to purchase land and build four soccer fields and a sleeping and dining facility to house 150 soccer players. Each year, the camp would be run for 8 sessions of 1 week each. The company would hire college soccer players as coaches. The camp attendees would be male and female soccer players ages 12–18. Property values in southern California have enjoyed a steady increase in value. It is expected that after using the facility for 20 years, Coolplay can sell the property for more than it was originally purchased for. The following amounts have been estimated.

Cost of land		$330,900
Cost to build soccer fields, dorm and dining facility		$661,800
Annual cash inflows assuming 150 players and 8 weeks		$1,014,760
Annual cash outflows		$926,520
Estimated useful life		20 years
Salvage value		$1,654,500
Discount rate		8%

Click here to view PV table.

(a)

Calculate the net present value of the project. (If the net present value is negative, use either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round answer to 0 decimal places, e.g. 125. For calculation purposes, use 5 decimal places as displayed in the factor table provided.)

Net present value

$

Should the project be accepted?

The project                                                                       shouldshould not be accepted.

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	$2,010 per week		$34 per hour		$40 per hour
Overtime earnings rate	Not applicable		1.5 times hourly rate		2 times hourly rate
Number of withholding allowances	3		2		1

For the current pay period, the computer programmer worked 60 hours and the administrator worked 50 hours. The federal income tax withheld for all three employees, who are single, can be determined by adding $356.90 to 28% of the difference between the employee's amount subject to withholding and $1,796.00. Assume further that the social security tax rate was 6%, the Medicare tax rate was 1.5%, and one withholding allowance is $70.

Determine the gross pay and the net pay for each of the three employees for the current pay period. Assume the normal working hours in a week are 40 hours. If required, round your answers to two decimal places.

	Consultant	Computer Programmer	Administrator
Gross pay	$	$	$
Net pay	$	$	$

Feedback

Gross pay represents the total earnings of an employee for a specific pay period, prior to taxes and deductions. Net pay is also known as take-home pay.

Locate the proper withholding wage bracket in the withholding table. Pay attention to the number of exemptions each employee is claiming.