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17 February, 21:20

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) $7,430,000 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 Game'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 total wages and salaries expense.

D) Express total payroll related costs as a percentage of employees take-home pay.

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  1. 17 February, 21:36
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    (a) $9,435,000

    (b) $5,230,000

    (c) 1.27 or 127%

    (d) 1.80 or 180%

    Explanation:

    (a) Big Game's total payroll - Related costs for the year:

    = wages and salaries expense + payroll taxes + workers compensation premiums + group health insurance premium + contributions to employees pension plan

    = $7,430,000 + 580,000 + 250,000 + 725,000 + 450,000

    = $9,435,000

    (b) Net amount of cash actually paid to employees:

    = wages and salaries earned - Amount withheld from the employees pay

    = $7,430,000 - $2,200,000

    = $5,230,000

    (c) Express total payroll related costs as a percentage of total wages and salaries expense:

    = Total payroll related costs : wages and salaries expense

    = $9,435,000 : $7,430,000

    = 1.27 or 127%

    (d) Express total payroll related costs as a percentage of employees take-home pay:

    = Total payroll related costs : Take home pay

    = $9,435,000 : $5,230,000

    = 1.80 or 180%
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