Question

Total Compensation Rate/hour $7.25 4. Cost of Hiring a New Employee Salary FICA (7.65%) Workers' Compensation (11.5%) Unemployment Insurance (6.2%) of $7,000 Total Cash Expense

Answer 1

Here's the workings for cost of hiring a new employee with appropriate explanations:

Per annum calculation has been used, because few tax calculations have threshold limit / cap on gross wages. To know whether the employee compensation falls within the purview or limit, per annum basis has been applied.

40 Cost of Hiring a New Employee Hours per week Weeks per year Total hours per annum Rate per hr 52 C=A*B D=as given Description Salary / Gross Wages Reference E=CD FICA (7.65%) 2080 $ 7.25 Total Compensation Explanation 15,080.00 FICA comprises of two types of social security tax: OASDI (Old-age, Survivors & Disability Insurance) & 1,154.00 Medicare Hospital Insurance OASDI (6.2% on Gross Wages with threshold limit on gross wages of $ 132900 per annum) (i.e.) Maximum contribution per annum should not be more than $ 71.55 8,239.80 (132900*6.2%) 16.73 Medicare (1.45% on gross wages) Worker's Compensation Insurance (11.5%) - State withholding tax which every employer has to remit to 1,734.20 the state OASDI Medicare Hospital insurance F=E*6.2% G=E*1.45% Worker's Compensation (11.5%) HEE*11.5% Unemployment Insurance (6.2% with threshold limit of $ 7000); this is FUTA (Federal unemployment Tax) Gross wage in excess of $ 7000 is not applicable for 434.00 tax; (i.e.) tax amount limited to $434 (7000*6.2%) 18,490.48 Total Cash Expense per annum 355.59 Assuming 52 weeks per annum I=E*6.2% if Eis more than $7000, $7000*6.2% J=E+F+G+H+1 1/52 Unemployment Insurance (6.2%) Total Cash Expense per annum Total Cash Expense per Week