Question

Breakin Away Company has three employees—a consultant, a computer programmer, and an administrator. The following payroll information is available for each employee:

	Consultant		Computer Programmer		Administrator
Regular earnings rate	$4,000 per week		$60 per hour		$50 per hour
Overtime earnings rate*	Not applicable		1.5 times hourly rate		2 times hourly rate
Number of withholding allowances	2		1		2
* For hourly employees, overtime is paid for hours worked in excess of 40 hours per week.

For the current pay period, the computer programmer worked 50 hours and the administrator worked 48 hours. The federal income tax withheld for all three employees, who are single, can be determined from the wage bracket withholding table in Exhibit 2. Assume further that the social security tax rate was 6.0%, the Medicare tax rate was 1.5%, and one withholding allowance is $75.

Determine the gross pay and the net pay for each of the three employees for the current pay period. If required, round your answers to two decimal places.

	Consultant	Computer Programmer	Administrator
Gross pay	$	$	$
Net pay	$	$	$

Answer 1

	Consultant	Computer Programmer	Administrator
Regular earning R	$4,000	$2,400	$2,000
		(60*40)	(50*40)
Overtime earning O		900	800
		($60*10*1.5)	($50*8*2)
Gross pay G= R+O	$4,000	$3,300	$2,800
Social security taxes payable (G*6%)	$240.00	$198.00	$168.00
Medicare taxes payable (G*1.45%)	$58.00	$47.85	$40.60
Federal Income tax withheld	857.16	809.16	509.16

Net pay G-S-M-F	$2,844.84	$2,244.99	$2,082.24
working
Assuming wage paid in 2018
	Consultant	Computer Programmer	Administrator
Federal Income tax withheld
Gross pay	$4,000	$3,300	$2,800
Less: withholding allowance	150	75	150
Income subject to withheld	$3,850	$3,225	$2,650
Income tax withheld	857.16	809.16	509.16
	617.16+(32%*(3850-3100))	617.16+(32%*(3850-32250))	271.08+(24%*(2650-1658)