Calculate the net pay for employee 1101. The overtime rate is time-and-a-half.
| Empl | Hrs | OT | Rate | Gross | FIT | FICA | Health | Dental | Net |
|---|---|---|---|---|---|---|---|---|---|
| 0010 | 40 | 5 | $12 | $570.00 | $57.00 | $43.61 | $15 | $5 | |
| 0011 | 40 | 0 | $16 | $640.00 | $64.00 | $48.96 | $15 | $0 | |
| 1101 | - | - | $78,000 | $1,500.00 | $300.00 | $114.75 | $200 | $12 | |
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Round to the nearest cent.
Answer (2)
Calculate total deductions by summing FIT, FICA, Health, and Dental insurance: Total Deductions = $300.00 + $114.75 + $200 + $12 = $626.75 .
Subtract total deductions from gross pay to find net pay: Net Pay = $1500.00 − $626.75 = $873.25 .
The net pay for employee 1101 is $873.25 .
Explanation
Identify Deductions First, we need to identify all the deductions from the employee's gross pay. From the table, we have the following deductions for employee 1101:
FIT (Federal Income Tax): $300.00
FICA (Federal Insurance Contributions Act): $114.75
Health insurance: $200
Dental insurance: $12
Calculate Total Deductions Next, we calculate the total deductions by summing up all the individual deductions:
Total Deductions = FIT + FICA + Health + Dental
Total Deductions = $300.00 + $114.75 + $200 + $12 = $626.75
Calculate Net Pay Now, we subtract the total deductions from the gross pay to find the net pay:
Net Pay = Gross Pay − Total Deductions
Net Pay = $1500.00 − $626.75 = $873.25
Final Answer Therefore, the net pay for employee 1101 is $873.25.
Examples
Understanding net pay is crucial in personal finance. For instance, when budgeting, it's important to know exactly how much money you're taking home after taxes and other deductions. If you're planning to save a certain percentage of your income, you should calculate that percentage based on your net pay, not your gross pay. This ensures that you're setting realistic and achievable savings goals.
The net pay for employee 1101 is calculated by deducting total deductions ($626.75) from the gross pay ($1500.00). This results in a net pay of $873.25. In summary, after all deductions, employee 1101 takes home $873.25 from their salary.
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