Question

During the first week of January, an employee works 48 hours. For this company, workers earn 150% of their regular rate for hours in excess of 40 per week. Her pay rate is $25 per hour, and her wages are subject to no deductions other than FICA Social Security, FICA Medicare, and federal income taxes. The tax rate for Social Security is 6.2% of the first $118,500 earned each calendar year and the FICA tax rate for Medicare is 1.45% of all earnings. The current FUTA tax rate is 0.6%, and the SUTA tax rate is 5.4%. Both unemployment taxes are applied to the first $7000 of an employee's pay. The employee has $85 in federal income taxes withheld. What is the amount of this employee's gross pay for the first week of January?

a. $1800
b. $1225
c. $1856
d. $1700
e. $1300

Answer 1

Answer: $1300

Step-by-step explanation:

Gross pay is the amount of money that an employee will receive before taxes or any other deductions will be made. The amount of this employee's gross pay for the first week of January goes thus:

Salary expense = (40 × $25) + (8 × $25 × 150%)

= $1000 + $300

= $1300

Therefore, the employees gross pay is $1300