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29 May, 23:48

An employee receives an hourly rate of $25, with time and a half for all hours worked in excess of 40 during a week. Payroll data for the current week are as follows: hours worked, 45; federal income tax withheld, $350; social security tax rate, 6.0%; and Medicare tax rate, 1.5%. What is the net amount to be paid to the employee?

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  1. 29 May, 23:55
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    The correct answer is $748.425

    Explanation:

    Wage Rate of Employee: $25

    Over time of Employee: $25 + $12.5 = $37.5

    Normal work hours: 40

    According to data, total hours worked by employee: 45

    Overtime hours: 5

    So normal work hour wage would be: 40 * 25 = 1000

    Overtime wage would be: 5 * 37.5 = 187.5

    Total wage for the week:

    1000+187.5 = 1187.5

    This is the gross income.

    NOW for net income, we would deduct all the taxes from the gross salary.

    Federal income tax deductions: = 1187.5-350 = 837.5

    Social Security is 6% of Gross pay. So 1187.5 * 0.06 = 71.25

    Medicare Tax is 1.5% of Gross pay. So 1187.5 * 0.015 = 17.8125

    Net Income = Gross salary - Federal income tax - Social security - Medicare Tax = 1187.5 - 350 - 71.25 - 17.1825

    = $748.425
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