An employee receives an hourly rate of $40, with time and a half for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked, 46; federal income tax withheld, $350; cumulative earnings for year prior to current week, $99,700; social security tax rate, 6.0% on maximum of $100,000; and Medicare tax rate, 1.5% on all earnings. What is the gross pay for the employee?
A) $775.00
B) $1,840.00
C) $1,960.00
D) $1,562.60

Question

Quizplus · Accepted Answer

First, calculate the regular pay for 40 hours at $40 per hour: 
40 hours x $40 per hour = $1600.
Next, calculate the overtime pay for the additional 6 hours at time and a half: 
6 hours x $60 per hour ($40 x 1.5) = $360.
Add the regular pay and overtime pay to get gross pay: 
$1600 + $360 = $1960.
Deductions: 
Social security tax = 6% x $100,000 (maximum taxable earnings) = $600.
Medicare tax = 1.5% x $1960 = $29.40
Federal income tax withheld = $350.
Net pay = Gross pay - Deductions 
Net pay = $1960 - $600 (social security) - $29.40 (Medicare) - $350 (federal income tax) = $980.60.

An Employee Receives an Hourly Rate of $40, with Time