Question

An employee receives an hourly rate of $25, with time and a half for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked, 45; federal income tax withheld, $350; social security tax rate, 6.0%; and Medicare tax rate, 1.5%. What is the net amount to be paid to the employee?

Answer 1

Answer:

The correct answer is  $748.425

Explanation:  

Wage Rate of Employee: $25  

Over time of Employee: $25 + $12.5 =  $37.5  

Normal work hours: 40  

According to data, total hours worked by employee: 45  

Overtime hours: 5  

So normal work hour wage would be: 40 * 25 = 1000  

Overtime wage would be: 5 * 37.5 = 187.5  

Total wage for the week:  

1000+187.5 = 1187.5    

This is the gross income.  

NOW for net income, we would deduct all the taxes from the gross salary.  

Federal income tax deductions: = 1187.5-350 = 837.5  

Social Security is 6% of Gross pay. So 1187.5 * 0.06 = 71.25  

Medicare Tax is 1.5% of Gross pay. So 1187.5 * 0.015 = 17.8125  

Net Income = Gross salary - Federal income tax - Social security - Medicare Tax = 1187.5 - 350 - 71.25 - 17.1825

= $748.425