Question

Prior to reaching the maximum taxable earnings, the amount of medicare withholding varies directly with the gross pay earned. If $13.85 is reported for the medicare withholding when the gross pay is $955, how much will be withheld for medicare when the gross pay is $1,050? Round k to 4 decimal places and round the answer to the nearest cent.

Answer 1

To find the new Medicare withholding amount for a gross pay of $1,050 based on a previous withholding of $13.85 from a $955 gross pay, calculate the rate of withholding and apply it to the new gross pay, making sure to round accordingly.

Step-by-step explanation:

The student's question relates to calculating the Medicare withholding when the gross pay changes. Given that $13.85 is the withholding amount for a $955 gross pay, and knowing that Medicare is typically withheld at a rate of 1.45% of gross pay, we can establish a proportion to find the withholding amount for a new gross pay of $1,050.

First, let's calculate the rate of Medicare withholding:

k = withholding / gross pay = $13.85 / $955

We can then apply the rate k to the new gross pay to find the new withholding amount:

New withholding = k × $1,050

Remember to round k to 4 decimal places and the answer to the nearest cent as per the original question.