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Chapter 9. Payroll. #9. Payroll. Learning Unit Objectives. Calculating Various Types of Employees’ Gross Pay. LU9.1. Define, compare, and contrast weekly, biweekly, semimonthly, and monthly pay periods Calculate gross pay with overtime on the basis of time

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chapter 9

Chapter 9

Payroll

slide2

#9

Payroll

Learning Unit Objectives

Calculating Various Types of Employees’ Gross Pay

LU9.1

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 with draw, variable commission scale and salary plus commission

slide3

#9

Payroll

Learning Unit Objectives

Computing Payroll Deductions for Employees’ Pay; Employers’ Responsibilities

LU9.2

Prepare and explain the parts of a payroll register

Explain and calculate federal and state unemployment taxes

hourly rate of pay calculation of overtime
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

hourly rate of pay calculation of overtime1
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

Rate is $9.00 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

61.5 – 40 = 21.5 overtime hours

$9 x 1.5 = 13.50 overtime rate

(40 hours x $9) + (21.5 hours x 13.5)

$360 + $290.25 = $650.25

straight piece rate pay
Straight Piece Rate Pay

Straight Piece Rate Pay

Gross pay = Number of units produced x Rate per unit

Ryan Foss produced 900 dolls. He is paid $.96 per doll. Calculate his gross pay

900 x $.96 = $864

differential pay schedule
Differential Pay Schedule

Differential Pay Schedule

Gross pay = Number of units produced x Various rates per unit

Logan Company pays Abby Rogers on the basis of the following schedule:

Units Amount

produced per unit

1-50 $ .50

51-150 .62

151-200 .75

Over 200 1.25

Last week Abby produced 300 dolls. What is Abby’s gross pay?

(50 x $.50) +(100 x $.62)+(50 x $.75) + (100 x $1.25) = $249.50

straight commission with draw
Straight Commission with Draw

Logan Company pays Jackie Okamoto a straight commission of 15% on her net sales (net sales are total sales less sales returns). In May, Jackie had net sales of $56,000. Logan gave Jackie a $600 draw in May. What is Jackie’s gross pay?

Commission is a certain percentage of the amount a salesperson sells.

Draw is an advance on the salesperson’s commission

($56,000 x .15) = $8,400

-600

$7,800

variable commission scale
Variable Commission Scale

Different commission rates for different levels of net sales

Last month Jane Ring’s net sales were $160,000. What is Jane’s gross pay based on the schedule?

Up to $35,000 4%

Excess of $35,000 to $45,000 6%

Over $45,000 8%

($35,000 x .04) + ($10,000 x .06) + ($115,000 x .08) = $11,200

salary plus commission
Salary Plus Commission

Gross Pay = Salary + Commission

Logan Company pays Joe Roy a $3,000 monthly salary plus a 4% commission for sales over $20,000. Last month Joe’s net sales were $50,000. Calculate Joe’s gross pay.

$3,000 + ($30,000 x .04) = $4,200

payroll register
Payroll Register

Rate Base

Social Security 6.20% $97,500

Medicare 1.45 No Base

table 9 1 9 2 percentage method income tax withholding tables
Table 9-1,9-2 Percentage method income tax withholding tables

One

Withholding

Payroll Period Allowance

Weekly $ 70.19

Bi weekly 140.38

Semimonthly 152.08

Monthly 304.17

Quarterly 912.50

SemiAnnually 1825.00

Daily or miscellaneous (each 14.04

day of the payroll period)

Partial

(b) MARRIED person -

if the amount of wages

(after subtracting The amount of income tax

withholding allowances) is: to withhold is:

Not over $154 $0

Over -- But not over -- of excess over --

$154 $461 10% $154

$461 $1,455 $30.70 plus 15% $461

$1,455 $2,785 $179.80 plus 25% $1,455

$2,785 $4,165 $512.30 plus 28% $2,785

$4,165 $7,321 $898.70 plus 33% $4,165

$7,321…… $1940.18 plus 35% $7,321

percentage method
Percentage Method

1) Locate one withholding allowance and multiply by the number of allowances employee claims

$70.19 x 2 = $140.38

$2,250.00

- 140.38

$2,109.62

2) Subtract step 1 from employees pay

$2,109.62

-1,455.00

$ 654.62

Tax $179.80 + .25 ($654.62)

$179.80 + 163.66 = $343.46

3) In table 9.2 locate appropriate table and compute income tax

employers responsibilities
Employers’ Responsibilities

Federal Unemployment Tax Act (FUTA)- 6.2% tax on the first $7,000 paid to employees as wages during the calendar year

6.2% FUTA

5.4% SUTA credit

.8% FUTA tax

*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.

Assume a company has total wages of $20,000 and $4,000 of the wages are exempt from SUTA. What are the company’s SUTA and FUTA taxes if the company’s SUTA rate is 5.8% due to a poor employment record?

$20,000- 4,000 (exempt wages) = $16,000

SUTA = $16,000 x .054 = $928, FUTA = $16,000 x .008 = $128

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