The following information is available for Lumberton Co. for the week ending June 28, 2013. All employees are paid time and one half for all hours over 40. Each employee has cumulative salary of over $7,000, but less than $110,000. Assume the Social Security tax rate is 6% on the first $110,000 of wages and the Medicare tax rate is 1.5% of total wages. The company contributes the retirement cost to a retirement plan for the employee.
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Required:
a. Set up a spread sheet to compute the net pay for each of the above employees. You will need to insert the appropriate excel formulas.
b. What is the total amount of compensation cost (salary cost plus payroll tax cost) for Lumberton Co. for the week ending June 28, 2013?
c. Lumberton is considering adding group health insurance coverage for its employees to its benefits package. If the average cost of health insurance per employee is $3,900 per year, how much additional cost would be added to weekly compensation cost for Lumberton? Assume the addition of health insurance and recompute the total compensation cost for Lumberton for the week ending June 28,2013.