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?

Question

Quizplus · Accepted Answer

To calculate the total payroll tax expense for the first week of January, we need to first calculate the total gross wages earned by the employees.

10 employees x 40 hours/week x $20/hour = $8,000

Now we can calculate the various taxes:

Federal income tax = 15% x $8,000 = $1,200 
State income tax = 6% x $8,000 = $480 
FICA tax = 7.65% x $8,000 = $612 
Unemployment tax = 3.8% x $7,000 = $266

Total payroll tax expense = $1,200 + $480 + $612 + $266 = $2,558

Therefore, the correct answer is C) $916.

Action Travel Has 10 Employees Each Working 40 Hours Per