Chapter 3, Problem 4P

Payroll for piece-rate wage system

Collier Manufacturing Co. operates on a modified wage plan. During one week’s operation, the following direct labor costs were incurred:

The employees are machine operators. Piece rates vary with the kind of product being produced. A minimum of $70 per day is guaranteed to each employee by union contract.

Required:

1. 1. Compute the weekly earnings for Travis, Nessman, and Smithers.
2. 2. Prepare journal entries to:
   1. a. record the week’s payroll, assuming that none of the employees has achieved the maximum base wage for FICA taxes. The income tax withheld for each employee amounts to 10% of gross wages.
   2. b. record payment of the payroll.
   3. c. record the employer’s share of payroll taxes, assuming that none of the employees has achieved the maximum base wage for FICA or unemployment taxes.