Instructions: Calculate the net monthly income and annual salary for the following scenario. Jason was a recent graduate from a university program with a Bachelor of Science in Medical Technology. He will begin a position at t local hospital working 40 hours a week with an hourly rate of $25.50. He will receive a paycheck every two weeks. In a document, calcu the following. Be sure to show your mathematical calculations. Refer to pages 535 and 536 in your textbook. Remember to convert a percentage to a decimal, you move the decimal two places to the left. For example, 5% is the same as multiplying x 0.05. 1. Gross Pay for 1 paycheck = calculated by multiplying hourly rate x 80 hours over 2 weeks. 2. Deductions for federal tax (15%) , state tax (2%), and city tax (1%) = answer to #1 multiplied by 0.15, multiplied by 0.02, and multiplied 0.01. 3. Deduction for F.I.C.A. or social security tax and Medicaid (7.65%) = answer to #1 multiplied by 0.0765. 4. Deduction of $117 for medical and dental insurance. 5. What would Jason's net monthly income and net annual salary be after taxes and insurance? Answer to #1 - Answer to #2 - Answer to $117 = net biweekly income. Net monthly would be this answer x 2. Net annual would be this answer x 12 months.

 

1. Gross pay: 2040
2. Deductions for taxes: 306, 40.8, 20.4
3. Other deductions: 156.06
4. Insurance deduction: 117
5. Net monthly income: $2799.48; net annual $33593.76

Step-by-step explanation

The key here is to follow step by step the instructions given in the manual.

So the first step in finding out the net montly income and annual salary is to compute for the gross pay for each of his paycheck. Given here are:

• Work hours: 40 hours per week but paychecks are given every 2 weeks, multiply this by 2. Thus, the 80 hours.
• Hourly rate: $25.50
• Gross pay = work hours x hourly rate = 80 hours x 25.50 = $2040.

Second step is to compute for the deductions in the paycheck.

The deductions were as follows: federal tax 15%, state tax 2%, city tax 1%, fica or social security tax and medicaid 7.65%, and medical and dental insurance of $117. To do this, simply convert the percentages intwo decimal points and multiply each with the computed gross pay.

• Federal tax deduction = 2040 x 0.15 = 306
• State tax deduction = 2040 x .02 = 40.8
• City tax deduction = 2040 x 0.01 = 20.4
• Social security tax and medicaid deduction = 2040 x 0.0765 =156.06
• Insurance deduction = 117
• Compute for the total deduction by adding all the computed values.
• Total deduction = 306 + 40.8 + 20.4 + 156.06 + 117 = $640.26

Lastly compute for the net monthly and annual income by subtracting the total deductions from the gross pay.

• Biweekly income = 2040 - 640.26 = $1399.74
• To get th monthly income, multiply this by 2. Thus, monthly income = 1399.74 x 2 = $2799.48
• To get the annual income, multiply the monthly income by 12 = 2799.48 x 12 = $33 593.76