HOMEWORK solutions 9b

HOMEWORK solutions - HOMEWORK solutions Ch 9 part b E93 Req 1 The additional labor expense was $6,013 which is the total of payroll taxes that must

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HOMEWORK solutions: Ch. 9, part b E9–3. Req. 1 The additional labor expense was $6,013, which is the total of payroll taxes that must be paid by the employer. The $9,500 income taxes and the $6,013 FICA taxes paid by the employees did not add to the labor cost of the employer. The total labor cost to the company was $78,000 + $6,013 = $84,013. The employees’ take-home pay was $62,487; that is, the total of salaries and wages less the deductions paid by the employees (i.e., $78,000 – $9,500 – $6,013). Req. 2 Balance sheet liabilities: Liability for income taxes withheld. .......................................................... $ 9,500 FICA taxes payable ($6,013 + $6,013). ................................................... 12,026 Total. ..................................................................................................... $21,526 Req. 3 Both managers and analysts would understand that a 10% increase in salaries is more expensive than a 10% increase in the employer’s share of FICA (or any other benefit). The reason is that many benefits are stated as a percentage of salary. As a result, the
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This note was uploaded on 05/29/2008 for the course BSAD 20B taught by Professor Bruce during the Spring '08 term at UC Riverside.

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HOMEWORK solutions - HOMEWORK solutions Ch 9 part b E93 Req 1 The additional labor expense was $6,013 which is the total of payroll taxes that must

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