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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

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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

Calculate gross pay for piecework, differential pay schedule, straight commission with draw, variable commission scale and salary plus commission

#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

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 Overtime

EmployeeMTWThFSTotal

R Valdez138.510811.2510.7561.5

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

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

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

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

UnitsAmount

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

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

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

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

RateBase

Social Security6.20%\$97,500

Medicare1.45No Base

### Federal Income Tax Withholding (FIT)

1. Percentage Method

### 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 subtractingThe amount of income tax

withholding allowances) is:to withhold is:

Not over \$154\$0

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

\$154 \$46110% \$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

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

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