Magnum Plus, Inc., is a manufacturer of hunting supplies. The following is a summary of the com-pany’s annual payroll-related costs: Wages and salaries expense (of which $2,200,000 was withheld fromemployees’ pay and forwarded directly to tax authorities) . . . . . . . . . . . . . . . . $7,200,000Payroll taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 580,000Workers’ compensation premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250,000Group health insurance premiums. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 725,000Contributions to employees’ pension plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450,000a. Compute Magnum’s total payroll-related costs for the year.b. Compute the net amount of cash actually paid to employees (their take-home pay).c. Express total payroll-related costs as a percentage of (1) total wages and salaries expense, and(2) employees’ take-home pay. (Round computations to the nearest 1 percent.)
Magnum Plus, Inc., is a manufacturer of hunting supplies. The following is a summary of the com-
pany’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.
b. Compute the net amount of cash actually paid to employees (their take-home pay).
c. Express total payroll-related costs as a percentage of (1) total wages and salaries expense, and
(2) employees’ take-home pay. (Round computations to the nearest 1 percent.)
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