Question

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	$3,010 per week		$36 per hour		$44 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.

Answer 1

Statement showing computation of Gross pay & Net pay of the three employees of Breakin Away Company

Particulars	Hours		Rate	Wages	Gross Wages	Withholding Allowance	Taxable Wages	Social Security Tax @6%	Medicare Tax @1.50%	Federal Income Tax	Net Wages
Consultant	Normal			3,010.00
	OT
				3,010.00	3,010.00	210.00	2,800.00	168.00	42.00	638.02	2,161.98
Computer Programmer	Normal	40.00	36.00	1,440.00
	OT	20.00	54.00	1,080.00
		60.00		2,520.00	2,520.00	140.00	2,380.00	142.80	35.70	520.42	1,821.08
Administrator	Normal	40.00	44.00	1,760.00
	OT	10.00	88.00	880.00
		50.00		2,640.00	2,640.00	70.00	2,570.00	154.20	38.55	573.62	1,873.63
Notes showing computation of Federal Income Tax
Particulars	Consultant	Computer Programmer	Administrator
Taxable Wages	2,800.00	2,380.00	2,570.00
Predetermined Slab	(1,796.00)	(1,796.00)	(1,796.00)
Amount taxable @ 28%	1,004.00	584.00	774.00
Tax @ 28%	281.12	163.52	216.72
Add	356.90	356.90	356.90
	638.02	520.42	573.62