Action Travel has 10 employees each working 40 hours per week and earning $20 an hour.Federal income taxes are withheld at 15% and state income taxes at 6%.FICA taxes are 7.65% and unemployment taxes are 3.8% of the first $7,000 earned per employee.What is the total payroll tax expense for the first week of January?
A)$612.
B)$1,224.
C)$916.
D)$304.

Question

Quizplus · Accepted Answer

To calculate the total payroll tax expense, we need to first calculate the total gross wages paid to the employees.

Total gross wages = 10 employees * 40 hours/week * $20/hour = $8,000

Next, we need to calculate the federal income tax withheld:

Federal income tax withheld = 15% * $8,000 = $1,200

Similarly, we calculate the state income tax withheld:

State income tax withheld = 6% * $8,000 = $480

We also need to calculate FICA taxes and unemployment taxes:

FICA taxes = 7.65% * $8,000 = $612

Unemployment taxes = 3.8% * $7,000 * 10 employees = $2,660

Adding up all the taxes, we get:

Total payroll tax expense = $1,200 + $480 + $612 + $2,660 = $4,952

So, the correct answer is (C) $916.

Action Travel Has 10 Employees Each Working 40 Hours Per