Final answer:
The total unemployment tax expense for Kathryn's earnings of $2,000 in May, given FUTA at 0.8% and SUTA at 5.4%, is $124, which is the sum of both FUTA and SUTA taxes calculated on her earnings. This situation assumes she has not exceeded the $7,000 tax ceiling for the year.
Step-by-step explanation:
The total unemployment tax expense for Kathryn's earnings can be calculated by adding both the Federal Unemployment Tax Act (FUTA) and the State Unemployment Tax Act (SUTA) expenses based on her $2,000 earnings for May. The FUTA tax rate is 0.8%, and the SUTA tax rate is 5.4%. Both taxes only apply to the first $7,000 of income each year, which means her entire monthly earnings are subject to these taxes as long as she has not yet exceeded the $7,000 ceiling for the year.
To calculate the FUTA tax expense, multiply Kathryn's earnings of $2,000 by the FUTA rate of 0.8%:
FUTA Tax = $2,000 * 0.008 = $16
To calculate the SUTA tax expense, multiply Kathryn's earnings of $2,000 by the SUTA rate of 5.4%:
SUTA Tax = $2,000 * 0.054 = $108
The total unemployment tax expense is the sum of the FUTA and SUTA taxes:
Total Unemployment Tax Expense = FUTA Tax + SUTA Tax = $16 + $108 = $124
Therefore, the answer to the question is c) $124.