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9-3
• Define, compare, and contrast weekly, biweekly, semimonthly, and monthly pay periods
• Calculate gross pay with overtime on the basis of time
• Calculate gross pay for piecework, differential pay schedule, straight commission, variable commission scale and salary plus commission
Payroll#9#9Learning Unit ObjectivesCalculating Various Types of Employees’ Gross Pay
LU9.1LU9.1
9-4
• Prepare and explain the parts of a payroll register
• Explain and calculate federal and state unemployment taxes
Payroll#9#9Learning Unit ObjectivesComputing Payroll Deductions for Employees’ Pay; Employers’ Responsibilities
LU9.2LU9.2
9-5
Payroll Cycles
Salary Paid Period (based on a year)
Weekly 52 times (once a week) $961.54 ($50,000/52)
Biweekly 26 times (every two weeks)$1,923.08 ($50,000/26)
Semimonthly 24 times (twice a month) $2,083.33 ($50,000/24)
Monthly 12 times (once a month) $4,166.67 ($50,000/12)
Earning per period
9-6
Hourly Rate of Pay; Calculation of Overtime
Gross pay = Hours Employee worked x Rate per hour
Hourly overtime pay rate = Regular hourly pay rate x 1.5
Gross pay = Earnings for 40 hours + Earnings at time-and-a-half rate
9-7
Hourly Rate of Pay; Calculation of Overtime
Employee M T W Th F S Total
R Valdez 13 8.5 10 8 11.25 10.75 61.5
Hourly overtime pay rate = Regular hourly pay rate x 1.5
Gross pay = Earnings for 40 hours + Earnings at time-and-a-half rate
(40 hours x $9) + (21.5 hours x 13.5)
$360 + $290.25 = $650.25
61.5 – 40 = 21.5 overtime hours $9 x 1.5 = 13.50 overtime rate
9-8
Straight Piece Rate Pay
Straight Piece Rate Pay
Gross pay = Number of units produced x Rate per unit
Rob produced 900 dolls. He is paid $.96 per doll.
Calculate his gross pay
900 x $.96 = $864
9-9
Differential Pay Schedule
Differential Pay Schedule
Gross pay = Number of units produced x Various rates per
unitUnits Amountproduced per unit1-50 $ .5051-150 .62151-200 .75Over 200 1.25
(50 x $.50) +(100 x $.62)+(50 x $.75) +
(100 x $1.25) = $249.50
John worked and produced 300 pieces last week. His wages would b e paid per differential pay schedule.
9-10
Commission
Commission is a certain percentage of the sales amount that a salesperson will get paid based on the net sales he or she has made.
Draw is the advance amount that a salesperson gets from his or her commission. The draw should be deducted from the total commission before the salesperson gets his or her final pay for the pay period.
9-11
Straight Commission with Draw
Commission is a certain percentage of the amount a
salesperson sells.
$56,000 is net sales.Draw is an advance on the salesperson’s commission.
Draw is $600 in this case.
Larry is paid a straight commission of 15%. His computer net sales were $56,000. Larry’s draw was $600. What is his gross pay?
($56,000 x 0.15) = $8,400
-600Gross pay $7,800
9-12
Variable Commission Scale
Different commission rates for different levels of net sales
Up to $35,000 4%
Excess of $35,000 to $45,000 6%
Over $45,000 8%
Juanita’s net sales were $160,000. What is her gross pay based on the schedule?
($35,000 x .04) + ($10,000 x .06) + ($115,000 x .08) = $11,200
Net sales divided into 3 levels:$160,000 = 35,000 + 10,000 + 115,000
9-13
Salary Plus CommissionGross Pay = Salary + Commission
Chung receives a salary of $3,000 per month. He also receives a 4% commission for sales over $20,000. Last month’s sales were $50,000. Calculate Chung’s gross
pay.
$3,000 + ($30,000 x .04) = $4,200
Sales amount over $20,000 with commission:$50,000 – 20,000 = $30,000 This amount would apply 4% commission.
9-14
Payroll Register
Week #41
Allowance& Salary
Employee marital Cum. per Cum. Health NetName status earnings week Reg. Ovt. Gross earnings S.S. Med. S.S. Med. FIT SIT Ins. Pay
Rey, Allice M-2 96,750 2,250 2,250 - 2,250 99,000 750 2,250 46.5 32.63 356 135 100 1,579.91A B C D E F G H I J K L M
GLO COMPANYPayroll Register
Earnings Taxable Earnings FICA
FICADeductions
Rate Base
Social Security 6.20% $97,500
Medicare 1.45 No Base
9-16
Table 9-3,9-4 Percentage method income tax withholding tables
OneWithholding
Payroll Period AllowanceWeekly $ 65.38Bi weekly 130.77Semimonthly 141.67Monthly 283.33Quarterly 850.00SemiAnnually 1700.00Daily or miscellaneous (each 13.08day of the payroll period)
(b) MARRIED person -if the amount of wages(after subtracting The amount of income taxwithholding allowances) is: to withhold is:Not over $154 $0Over -- But not over -- of excess over --$154 $449 10% $154$449 $1,360 $29.50 plus 15% $449$1,360 $2,573 $166.15 plus 25% $1,360$2,573 $3,907 $469.40 plus 28% $2,573$3,907 $6,865 $842.92 plus 33% $3,907$6,865…… $1819.06 plus 35% $6,865
Partial
9-17
Percentage Method
1) Locate one withholding allowance and multiply by the number of allowances employee claims
2) Subtract step 1 from employees pay
3) In table 9.2 locate appropriate table and compute income tax
$65.38 x 2 = $130.76
$2,250.00 - 130.76$2,119.24
$2,119.24 -1,360.00$ 759.24
Tax $166.15 + .25 ($759.24) $166.15 + 189.81 = $355.96
9-18
Employers’ Responsibilities
Federal Unemployment Tax Act (FUTA)- 6.2% tax on the first $7,000 paid to employees as wages during the calendar year
*State Unemployment Tax Act (SUTA)- 5.4% tax on the first $7,000 paid to employees as wages during the calendar year
*Can be credited against the 6.2% federal rate.
Employee earns $9,000 in the first quarter. How much does the employer pay in FUTA & SUTA?
SUTA = $7,000 x .054 = $378, FUTA = $7,000 x .008 = $56
6.2% FUTA
5.4% SUTA credit
.8% FUTA tax
9-20
Summary Practice Test: No. 3
Solution:
$40,000 x 0.06 = $2,400 40,000 x 0.07 = 2,800150,000 x 0.13 = 19,500
------------------- $24,700
Sales amount is $230,000$230,000 = 40,000 + 40,000 + 150,000
9-21
Problem 9-26:
Solution:
Social Security: $2,100 x .062 = $130.20 Medicare: $2,100 x .0145 = $30.45
Yes for Social Security: 52 weeks x $2,100 = $109,200 - 97,500 $ 11,700 exempt
9-22
Problem 9-27:
Solution:
Social Security: $1,000 x .062 = $62Medicare: $1,300 x 0.0145 = $18.85
FIT: $1,300.00 - 130.76 ($65.38 x 2) $1,169.24 Base FIT + Additional FIT - 449.00 $29.50 + (0.15) ($720.24) $ 720.24 $29.50 + $108.04 = $137.54
2 is the exemption.$65.38 per exemption.
9-23
Problem 9-30:
Solution:
11 x $400 = $ 4,40011 x $500 = 5,50011 x $700 = 7,700 17,600 - 700 $16,900
State: $16,900 x .056 = $946.40
Federal: $16,900 x .008 = $135.20
$0 for week 30 (At week 30, all 3 employees had over $7,000 in wages in the year).
For the 3rd employee, the employer needs to pay up to the first $7,000. Hence, $700 should be deducted from the total $17,600.