Question

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 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. $

Answer 1

a. Gross pay for the week = $2,240

b. net pay for the week = $683

Step-by-step explanation:

a) gross pay for the week = total amount earned, before the deduction of taxes and other charges, it is calculated as follows:

amount earned per hour = $32

amount earned in excess of 40 hours = 1.5 × 32 = $48 per hour

Total hour worked = 60 hours

This means that in the first 40 hours, the employee earned 32$ per hour and $48 per hour for the next 20 hours

∴ amount earned in the first 40 hours = 32 × 40 = $1,280

amount earned in the next 20 hours = 48 × 20 = $960

∴ Gross pay for the week = 1,280 + 960 = $2,240

b) net pay for the week = Gross pay - (Total deductions)

Deductions are as follows:

social security tax rate = 6.0% of gross pay = 0.06 × 2,240 = $134.4

Medicare tax rate = 1.5% of gross pay = 0.015 × 2,240 = $33.6

Federal income tax = $515

Total deductions = 134.4 + 33.6 + 515 = $683

∴ Net pay for the week = 2,240 - 683 = $1,557