Question

Calculate Payroll K. Mello 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 $2,710 per week $50 per hour $30 per hour 2 times hourly rate Not applicable 1.5 times hourly rate Overtime earnings rate Federal income tax withheld $925 $239 $500 For hourly employees, overtime is paid for hours worked in excess of 40 hours per week. For the current pay period, the computer programmer worked 54 hours and the administrator worked 62 hours. Assume further that the social security tax rate was 6%, and the Medicare tax rate was 1.5%. 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 TA पी

Answer 1

Gross pay is equal to total gross amount of salaries and wages payable to employees and net pay is equal to gross pay less all the deductions (i..e. federal tax, social security tax and medicare tax). Calculation of gross pay and net pay for each employees is shown as follows:-

Calculation of Gross Pay and Net pay (Amounts in $)

	Consultant	Computer Programmer	Administrator
a) Regular Earnings	2,710.00	1,200.00 (40 hrs*$30)	2,000.00 (40 hrs*$50)
b) Overtime Earnings	0.00	840.00 [(54 hrs-40 hrs)*$30*2]	1,650.00 [(62 hrs-40 hrs)*$50*1.5]
c) Gross Pay (a+b)	2,710.00	2,040.00	3,650.00
Deductions:
d) Social Security Tax (c*6%)	162.60	122.40	219.00
e) Medicare Tax (c*1.5%)	40.65	30.60	54.75
f) Federal income tax withheld	925.00	239.00	500.00
g) Total deductions (d+e+f)	1,128.25	392.00	773.75
h) Net pay (c-g)	1,581.75	1,648	2,876.25

Notes:-

1) Hours worked in excess of 40 hours are paid at overtime rate (i.e. 2 times regular rate for Computer Programmer and 1.5 times regular rate for Administrator).