Aspen Ski Resorts has 150 employees, each working 40 hours per week and earning

ID: 2486191 • Letter: A

Question

Aspen Ski Resorts has 150 employees, each working 40 hours per week and earning $14 an hour. Although the company does not pay any health or retirement benefits, one of the perks of working at Aspen is that employees are allowed free skiing on their days off. Federal Income taxes are withheld at 15% and state Income taxes at 5%. FICA taxes are 7.65% of the first $113,700 earned per employee and 1.45% thereafter. Unemployment taxes are 6.2% of the first $7,000 earned per employee. Compute the total salary expense, the total withholdings from employee salaries, and the actual direct deposit of payroll for the first week of January.

Explanation / Answer

The following assumptions are taken as per details given

they are 150 employees

each employee works for 40 hours in a week

the hourly wages are $14

the withholdings amount are as follows

federal income tax @ 15% on total wages per employee

state income tax @ 5% on total wages per employee

FICA @ 7.65%upto income $113,700 per employee in this case it will 7.65% as income has not reached $113,700 per employee

Unemployment tax @ 6.2% per employees till amount reaches $7,000

The calculation of first week of Jan employment salaries are given below

withHoldings amount

employees

no of hours

wages per hour($)

total wages

federal income tax @ 15%

state income tax @ 5%

FICA @7.65%

unemploment tax @6.2%

Total witholdings

actual direct deposit

560

42.84

34.72

189.56

370.44

150

84000

28434.00

55566

The total salary expense is $84,000

The withholding amount is $28,434

The actual direct deposit is $55,566