Question

Barbara is an employee of Baltimore Company. Baltimore Company pays employees the Friday after the wages are earned. Overtime in excess of 40 hours must be paid at 150% of the normal hourly rate. Social Security taxes are 6.2% and Medicare taxes are 1.45%. The federal unemployment tax rate is 1.0% and the state unemployment tax rate is 3.0%. Barbara's wages, including the current pay period, will not exceed the limits for Social Security, Medicare and unemployment taxes. Barbara earns $16 per hour and worked 48 hours for the week ended January 13 , 2019. Baltimore will withhold $220 federal income taxes. Use this information to determine the total payroll tax expense for Baltimore Company as related to Barbara's earnings. (Round to the closest cent)

Answer 1

Total Payroll tax expense is $91.336

Step-by-step explanation:

Normal Wage rate=$16 per hr

Overtime wage tare=$16*150%=$24 per hr

Barbara Normal Income=40*16=640

Barbara Overtime income=6*24=144

Total earnings=640+144=784

Social security tax=784*6.2%=48.608

Medicare taxes=784*1.45%=11.368

Federal unemployment tax=784*1.0%=7.84

State Unemployment tax=784*3.0%=23.52

Total payroll expense for Baltimore company is total of all taxes including extra $220 federal income taxes i.e

$48.608+$11.368+$7.84+$23.52=$ 91.336

Hence, $91.336 will be the total payroll tax expense for Baltimore company.