Chapter 2: Understanding Your Paycheck - Chapter Exam Review

Use the formula to solve the following:

Formula:

total annual employee benefits = benefit one + benefit two + benefit three

total annual value of job = annual gross pay + total annual employee benefits

Problem:

Diego works part-time as a dog walker, earning $15.25 per hour. He averages 60 hours per month. In addition, his employer gives him a monthly $25 bonus for perfect attendance. What is Diego’s total annual income from this job?

• $11,880

• $10,980

• $11,580

• $11,280

Use the formula to solve the following:

Formula:

social security tax= gross pay × tax rate

Problem:

Ben works as a cashier and earns $820 per week. How much Social Security tax will be withheld from Ben’s weekly paycheck?

• $53.75

• $42.64

• $48.10

• $50.84

What do Social Security taxes pay for?

• Unemployment benefits

• Housing assistance

• Health insurance for children

• Retirement and disability benefits

Use the formula to solve the following:

Formula:

new hourly rate = current hourly rate × (1 + rate of raise) amount of raise per week = (new hourly rate - current hourly rate) × hours worked per week

Problem:

Leo works as a warehouse associate earning $19.25 per hour. He will get a 3% raise. If Leo works 45 hours per week, how much more will he earn per week after his raise?

• $27.00

• $25.99

• $25.50

• $24.95

What does FICA stand for?

• Federal Insurance Contributions Act

• Federal Income and Credit Act

• Federal Income Collection Agency

• Financial Insurance and Credit Agreement

Dylan has a gross income of $55,000 a year after applying standard deductions. The state income tax rate is 3.2%. Calculate the state income tax Dylan owes for the year.

• $1,760

• $1,654

• $1,632

• $1,650

Use the formula to solve the following:

Formula:

percent withheld = total amount of deductions ÷ gross pay × 100

Problem:

James earns a gross pay of $1,025.50 working at a resort. His deductions total $153.83. What percent of his pay is being withheld?

• 16%

• 17%

• 15%

• 14%

Use the formula to solve the following:

Formula:

percent withheld = total amount of deductions ÷ gross pay × 100

Problem:

Maria works at a clothing store. Her total deductions are $142.20, and her gross pay is $568.80. What percent of Maria’s gross pay is being withheld?

• 20%

• 25%

• 30%

• 22%

Emily has a gross pay of $1,450. By how much will Emily’s gross pay be reduced if she has the following items withheld?

Federal tax: $112

Social Security tax: 6.2% of her gross pay

Medicare tax: 1.45% of her gross pay

State tax: 15% of her federal tax

• $263.90

• $239.73

• $273.40

• $278.48

Use the formula to solve the following:

Formula:

state income tax = gross pay × tax rate

Problem:

John is a freelance writer with a taxable income of $27,500. Using the following tax table, calculate his state income tax:

• $620

• $560

• $650

• $480