An employee receives an hourly rate of $15, with time and a half for all hours worked in excess of 40 during the week. Payroll data for the current week are as follows: hours worked, 46; federal income tax withheld, $110; cumulative earnings for the year prior to this week, $24,500; Social security tax rate, 6% on maximum of $100,000; and Medicare tax rate, 1.5% on all earnings; state unemployment compensation tax, 3.4% on the first $7,000; federal unemployment compensation tax, .8% on the first $7,000. What is the net amount to be paid to the employee?
A) $569.87
B) $539.00
C) $625.00
D) $544.88

Question

Quizplus · Accepted Answer

The employee's gross pay is calculated as follows: 40 hours at $15/hour = $600, plus 6 overtime hours at $22.50/hour (time and a half) = $135, for a total of $735. Deductions include federal income tax ($110), Social Security tax (6% of $735 = $44.10), and Medicare tax (1.5% of $735 = $11.03). The unemployment taxes do not affect the net pay as they are employer liabilities. The net pay is $735 - $110 - $44.10 - $11.03 = $569.87.

An Employee Receives an Hourly Rate of $15, with Time