1. Chapter 09 Payroll Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

2. 9-2 1. Define, compare, and contrast weekly, biweekly, semimonthly, and monthly pay periods 2. Calculate gross pay with overtime on the basis of time 3. Calculate gross pay for piecework, differential pay schedule, straight commission with draw, variable commission scale and salary plus commission Payroll #9 Learning Unit Objectives Calculating Various Types of Employees’ Gross Pay LU9.1

3. 9-3 1. Prepare and explain the parts of a payroll register 2. Explain and calculate federal and state unemployment taxes Payroll #9 Learning Unit Objectives Computing Payroll Deductions for Employees’ Pay; Employers’ Responsibilities LU9.2

4. 9-4 Payroll Cycles

5. 9-5 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

6. 9-6 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 (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

7. 9-7 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

8. 9-8 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

9. 9-9 Straight Commission with Draw Commission is a certain percentage of the amount a salesperson sells. Draw is an advance on the salesperson’s commission 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? ($56,000 x.15) = $8,400 -600 $7,800

10. 9-10 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% Last month Jane Ring’s net sales were $160,000. What is Jane’s gross pay based on the schedule? ($35,000 x.04) + ($10,000 x.06) + ($115,000 x.08) = $11,200

11. 9-11 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

12. 9-12 Payroll Register RateBase Social Security6.20%$97,500 Medicare1.45No Base

13. 9-13 Federal Income Tax Withholding (FIT) 1. Percentage Method

14. 9-14 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) (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 Partial

15. 9-15 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 $70.19 x 2 = $140.38 $2,250.00 - 140.38 $2,109.62 -1,455.00 $ 654.62 Tax $179.80 +.25 ($654.62) $179.80 + 163.66 = $343.46

16. 9-16 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. 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 6.2% FUTA 5.4% SUTA credit.8% FUTA tax

17. 9-17 Problem 9-24: Solution: $8.00 X 37 (hrs) $296.00 - 70.19 (70.19 x 1) $225.81 -200.00 $ 25.81 $14.90 + 3.87 (.15 x $25.81) 18.77 FIT

18. 9-18 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 -106,800 $ 2,400 exempt

19. 9-19 Problem 9-27: Solution: Social Security: $1,000 x.062 = $62 Medicare: $1,300 x.0145 = $18.85 $1,300 - $62 - $18.85 - $137.54 =$1,081.61 FIT: $1,300.00 - 140.38 ($70.19 x 2) $1,159.62 - 461.00 $30.70 +.15 ($698.62) $ 698.62 $30.70 + $104.79 = $135.49

20. 9-20 Problem 9-30: Solution: 11 x $400 = $ 4,400 11 x $500 = 5,500 11 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