Magnum Plus, Inc., is a manufacturer of hunting supplies. The following is a sum

Question

Magnum Plus, Inc., is a manufacturer of hunting supplies. The following is a summary of the company's annual payroll-related costs: Wages and salaries expense (of which $2,200,000 was withheld from employees' pay and forwarded directly to tax authorities) $ 7,200,000 Payroll taxes 580,000 Workers' compensation premiums 250,000 Group health insurance premiums 725,000 Contributions to employees' pension plan 450,000 a. Compute Magnum's total payroll-related costs for the year. (Omit the "$" sign in your response.) Payroll related costs $ b. Compute the net amount of cash actually paid to employees (their take-home pay). (Omit the "$" sign in your response.) Take-home pay $ c (1) Express total payroll-related costs as a percentage of total wages and salaries expense. (Round your answer to the nearest whole number. Omit the "%" sign in your response.) Total wages and salaries expense % c (2) Express total payroll-related costs as a percentage of employees' take-home pay. (Round your answer to the nearest whole number. Omit the "%" sign in your response.) Employees' take-home pay %

Explanation / Answer

a. Total payroll related costs: Wages and salaries expense.................$7,200,000 Payroll taxes...................................580,000 Workers' compensation premiums..........250,000 Group health insurance premiums..........725,000 Contributions to employees' pension plan..450,000 Total payroll related costs....................$9,205,000 b. Employees' "take-home pay": Wages and salaries earned...................$7,200,000 Amounts withheld from employees' pay......2,200,000 "Take-home pay"...............................$5,000,000 c. (1) $ 9,205,000÷$ 7,200,000 = 128% (2) $ 9,205,000÷$ 5,000,000 = 184%

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