Financial Math Fall Final Unit 3 Calculations Review

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What is FICA and how is it calculated?

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FICA stands for the Federal Insurance Contributions Act, which is a U.S. law that mandates a payroll tax to fund Social Security and Medicare. The FICA tax rate is typically 7.65% of gross wages.

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How do you calculate gross pay for hourly workers?

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Gross pay for hourly workers is calculated by multiplying the number of hours worked by the hourly wage. For overtime (hours over 40 in a week), the pay rate is usually 1.5 times the regular hourly wage.

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What is the purpose of health insurance premiums?

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Health insurance premiums are payments made to an insurance company to maintain coverage. They can be deducted from gross income before taxes, reducing taxable income.

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How do you calculate tax savings from pre-tax deductions?

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Tax savings from pre-tax deductions are calculated by multiplying the amount of the deduction by the tax rate. For example, if the premium is $425.45 and the tax rate is 24%, the savings would be $425.45 * 0.24.

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What is net pay and how is it different from gross pay?

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Net pay is the amount of money an employee takes home after all deductions (taxes, insurance, etc.) are subtracted from gross pay. Gross pay is the total earnings before any deductions.

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What is a commission in sales?

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A commission is a payment to an employee based on the sales they generate. It is usually a percentage of the sales amount.

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How do you calculate annual salary from monthly earnings?

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To calculate annual salary from monthly earnings, multiply the monthly salary by 12. For example, if the monthly salary is $2,500, the annual salary would be $2,500 * 12 = $30,000.

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What is the significance of withholding tables?

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Withholding tables are used to determine the amount of income tax to withhold from an employee's paycheck based on their earnings and filing status.

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What is the overtime pay rate?

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The overtime pay rate is typically 1.5 times the regular hourly rate for any hours worked over 40 in a week.

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How do you calculate the total earnings from a base salary and commission?

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Total earnings can be calculated by adding the base salary to the commission earned. For example, if the base salary is $2,500 and the commission is $84 (8% of $1,050), total earnings would be $2,500 + $84 = $2,584.