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13. If an employee has a salary of $50,000 per year, and extra benefits of $7,200...

13. If an employee has a salary of $50,000 per year, and extra benefits of $7,200 per year, what is the direct cost of this employee for the firm considering a Social Security tax of 7.65%? Show your complete calculations. (2 points)

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Answer #1

The direct cost of the employee for the firm are:

A. Salary of the employee = $50,000

B. Additional/ extra benefits = $7200

C. Employer's contribution to Social Security tax

=($50000 + $7200) = $57200 * 7.65% = $4375.80

Direct cost of the employee for the firm (A+B+C)

= $61575.80

Points to be noted;

(i) The social security tax shall be calculated on all incomes earned by employee.

(ii) The employee's portion of social security tax shall be collected by employer and paid to government.

Here, the employer shall work as an intermediary.

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