Question

Big Game, Inc., is a manufacturer of hunting supplies. The following is a summary of the company's annual payroll-related costs: Wages and salaries expense (of which $2,200,000 was withheld from employees' pay and forwarded directly to tax authorities)$7,430,000 Payroll taxes 580,000 Workers' compensation premiums 250,000 Group health insurance premiums 725,000 Contributions to employees' pension plan 450,000 A) Compute Big Game's total payroll- Related costs for the year.
B) Compute the net amount of cash actually paid to employees (Their take-home pay)

C) Express total payroll related costs as a percentage of total wages and salaries expense.

D) Express total payroll related costs as a percentage of employees take-home pay.

Show all work

Answer 1

Answer:

(a) $9,435,000

(b) $5,230,000

(c) 1.27 or 127%

(d) 1.80 or 180%

Explanation:

(a) Big Game's total payroll- Related costs for the year:

= wages and salaries expense + payroll taxes + workers compensation premiums + group health insurance premium + contributions to employees pension plan

= $7,430,000 + 580,000 + 250,000 + 725,000 + 450,000

= $9,435,000

(b) Net amount of cash actually paid to employees:

= wages and salaries earned - Amount withheld from the employees pay

= $7,430,000 - $2,200,000

= $5,230,000

(c) Express total payroll related costs as a percentage of total wages and salaries expense:

= Total payroll related costs ÷ wages and salaries expense

= $9,435,000 ÷ $7,430,000

= 1.27 or 127%

(d) Express total payroll related costs as a percentage of employees take-home pay:

= Total payroll related costs ÷ Take home pay

= $9,435,000 ÷ $5,230,000

= 1.80 or 180%