Exercise 10.4 Employees - What Do They Really Cost? (LO10-3)

Big Game, 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)	$	6,540,000
Payroll taxes		580,000
Workers' compensation premiums		250,000
Group health insurance premiums		725,000
Contributions to employees' pension plan		450,000

a.

Compute Big Games total payroll-related costs for the year.

Total payroll-related costs

sheet is drawn here

b.

Compute the net amount of cash actually paid to employees (their take-home pay).

Employees' take-home pay

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c-1.	Express total payroll-related costs as a percentage of total wages and salaries expense.

Total payroll-related costs as a percentage of total wages and salaries expense

%

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c-2.	Express total payroll-related costs as a percentage of employees' take-home pay.

Total payroll-related costs as a percentage of employees' take home pay

%

sheet is drawn here