An employee earns $32 per hour and 1.5 times that rate for all hours in excess of 40 hours per week. Assume that the employee worked 60 hours during the week, and that the gross pay prior to the current week totaled $46,400. Assume further that the social security tax rate was 6.0%, the Medicare tax rate was 1.5%, and the federal income tax to be withheld was $515. a. Determine the gross pay for the week. $ If applicable, round your final answer to two decimal places. b. Determine the net pay for the week. $
Answered on
a. To determine the gross pay for the week, we can calculate the employee's earnings based on the standard rate for the first 40 hours and the overtime rate for the additional hours.
Regular pay for first 40 hours = $32/hour * 40 hours
Regular pay for first 40 hours = $1280
The employee has worked 20 additional hours (60 - 40 = 20 hours), and the rate for these hours is 1.5 times the normal rate.
Overtime pay = $32/hour * 1.5 * 20 hours
Overtime pay = $960
Total gross pay for the week = Regular pay + Overtime pay
Total gross pay for the week = $1280 + $960
Total gross pay for the week = $2240
b. To determine the net pay for the week, we need to subtract the taxes and withholdings from the gross pay.
Social Security Tax = 6.0% of $2240
Social Security Tax = 0.06 * $2240
Social Security Tax = $134.40
Medicare Tax = 1.5% of $2240
Medicare Tax = 0.015 * $2240
Medicare Tax = $33.60
Federal Income Tax = $515 (given)
Total taxes withheld = Social Security Tax + Medicare Tax + Federal Income Tax Total taxes withheld
Total taxes withheld = $134.40 + $33.60 + $515
Total taxes withheld = $683
Net pay for the week = Gross pay - Total taxes withheld Net pay for the week
Net pay for the week = $2240 - $683
Net pay for the week = $1557
The employee's net pay for the week is $1557.