Question

Another year has gone by. Bill is in the same job for four years now, Lauren is four years old, and Pam is the second year of her business.

Pam's business is doing very well. She's been so busy that she hired her first employee, Kyle Hughes (132-98-6219), who began working on October 1. Kyle wanted no benefits, just a good salary. But he did ask Pam about "supper money." For the current year, Kyle earned $14,000 (annual salary of $56,000). He asked Pam to withhold federal income taxes at a rate of 15% of gross pay and NJ income taxes at a rate of 2.5% of gross pay.

Pam also sold her Dell computer for $2152 (which she bought for $1800 about 17 months ago) and purchased a new HP computer for Kyle's use. At the time of the sale, Pam had deducted $648 of depreciation on the Dell.

1. Calculate Kyle's gross pay, his payroll tax deductions for Social Security, MHI, FIT, NJIT, NJSUI/etc., FUTA, and net pay for the quarter. (Check figure: net pay = $10,380.30)
2. Calculate the payroll tax that Pam has to pay (as the employer) for Social Security, MHI, NJSUI/etc., FUTA. (Check figure: total payroll taxes = $1,575.00).

Answer 1

solution :

given that Rundle Freight Company owns a truck that cost $33,000.

also given that Currently, the truck’s book value is $27,000, and its expected remaining useful life is five years

mentioned in gi ven indormation that

Rundle has the opportunity to purchase for $28,000 a replacement truck that is extremely fuel efficient. Fuel cost for the old truck is expected to be $7,000 per year more than fuel cost for the new truck.

some other given information The old truck is paid for but, in spite of being in good condition, can be sold for only $16,000.

Calculating the total relevant costs:

	retaining truck	replacing truck
cost of the new truck	$-	$28000
additional fuel cost (5*7000)	$35000	$-
oppurtunity cost	$16000	$-
total cost	$51000	$28000

final decision of retaining old truck :

the purchase cost of ol;d truck and book value are irrelevant

they are sunk cost

therefore they should not be considered

the comparision cost of replacing and retaining truck are given above

from the above table

the company should replace the old truck as it would cost $28000 in replacement as against the cost of reraining truck of $51000