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 actual direct deposit of payroll for the first week of January?

Question

Quizplus · Accepted Answer

1. Calculate gross pay per employee: 
40 hours/week x $20/hour = $800/employee/week

2. Calculate federal income tax withholding per employee: 
$800 x 15% = $120/employee/week

3. Calculate state income tax withholding per employee: 
$800 x 6% = $48/employee/week

4. Calculate FICA taxes per employee: 
$800 x 7.65% = $61.20/employee/week

5. Calculate unemployment taxes per employee: 
$7,000 x 3.8% = $266/employee/year 
$266/52 weeks = $5.12/employee/week

6. Calculate total deductions per employee: 
$120 + $48 + $61.20 + $5.12= $234.32

7. Calculate net pay per employee: 
$800 - $234.32 = $565.68/employee/week

8. Calculate total payroll for all employees: 
$565.68 x 10 employees = $5,656.80/week

9. Round to the nearest dollar and the best choice is B: $5,708.

Action Travel Has 10 Employees Each Working 40 Hours Per