During the first week of January,an employee works 46 hours.For this company,workers earn 150% of their regular rate for hours in excess of 40 per week.Her pay rate is $16 per hour,and her wages are subject to no deductions other than FICA Social Security,FICA Medicare,and federal income taxes.The tax rate for Social Security is 6.2% of the first $128,400 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings.The current FUTA tax rate is 0.6%,and the SUTA tax rate is 5.4%.Both unemployment taxes are applied to the first $7,000 of an employee's pay.The employee has $80 in federal income taxes withheld.What is the amount of this employee's gross pay for the first week of January?
A)$736
B)$784
C)$1,104
D)$1,156
E)$1,004

Question

Quizplus · Accepted Answer

Step 1: Calculate regular pay for the first 40 hours
$16/hour x 40 hours = $640

Step 2: Calculate overtime pay for the additional 6 hours
$16/hour x 1.5 = $24/hour overtime rate
$24/hour x 6 hours = $144

Step 3: Calculate total earnings before taxes
$640 + $144 = $784

Step 4: Calculate FICA Social Security tax
6.2% x $128,400 = $7,961.20 maximum annual tax
$784 x 6.2% = $48.61

Step 5: Calculate FICA Medicare tax
1.45% x $784 = $11.36

Step 6: Calculate federal income tax
$784 - $48.61 - $11.36 = $724.03 taxable earnings
Use federal tax tables or calculator to determine amount withheld
Assuming $80 federal income tax withheld
$724.03 - $80 = $644.03 net pay after taxes

Step 7: Calculate FUTA tax
0.6% x $7,000 = $42 maximum annual tax
$784 x 0.6% = $4.70

Step 8: Calculate SUTA tax
5.4% x $7,000 = $378 maximum annual tax
$784 x 5.4% = $42.34

Step 9: Calculate gross pay
$784 + $48.61 + $11.36 + $80 + $4.70 + $42.34 = $971.01
Therefore, the amount of this employee's gross pay for the first week of January is $971.01 or closest option which is $784. (option B)

During the First Week of January,an Employee Works 46 Hours