A company has 24 employees who are paid on a monthly basis. For the most recent month, gross earnings were $78,000, of which $27,000 is subject to employment taxes. The federal unemployment tax rate is.8% and the state unemployment rate is 5.4%. Federal income taxes are withheld at the rate of 20% of total earnings. All earnings are subject to FICA taxes of 8%.
What is the employer's total payroll taxes expense for the month?
A) $23,514
B) $ 7,914
C) $12,480
D) $ 6,240

Question

Quizplus · Accepted Answer

The employer's total payroll taxes expense includes FICA taxes on all earnings, federal unemployment tax (FUTA) and state unemployment tax (SUTA) on the $27,000 subject to employment taxes. FICA taxes: 8% of $78,000 = $6,240. FUTA: 0.8% of $27,000 = $216. SUTA: 5.4% of $27,000 = $1,458. Total = $6,240 + $216 + $1,458 = $7,914.

A Company Has 24 Employees Who Are Paid on a Monthly