Mission Company Has Three Employees The Compary Is Subject to the Following Taxes

question 81

Multiple Choice

Mission Company has three employees: $\begin{array}{llr}&\text { Gross Pay through July }&\text { Gross Pay for August }\\\text { Smith } & \$ 3,200 & \$ 1,000 \\\hline \text { Cain } & 25,800 & 3,500 \\\hline \text { Clark } & 94,600 & 13,100\end{array}$
The compary is subject to the following taxes: $$\begin{array} { l c l } \text { Tax } & \text { Rate } & \text { Applied To } \\\text { FICA-Social Security } & 6.20 \% & \text { First } \$ 106,800 \\\text { FICA-Medicare } & 1.45 & \text { All gross pay } \\\text { FUTA } & .80 & \text { First } \$ 7,000 \\\text { SUTA } & 5.40 & \text { First } \$ 7,000\end{array}$$ What is the amount that Mission Company will withhold from Smith's August gross pay?

• A) $ 62.00
• B) $138.50
• C) $443.20
• D) $581.70
• E) $76.50

---

Definitions:

Operating Leverage

A measure of how revenue growth translates into growth in operating income, demonstrating the proportion of fixed versus variable costs a company has.

Fixed Costs

Expenses that remain constant regardless of how much is produced or sold, including rent, salaries, and insurance costs.

Accounting Break-Even

The point where total sales equal total expenses, and the company makes no profit but also incurs no loss.

Depreciation Expense

An accounting method of allocating the cost of a tangible asset over its useful life, representing how much of the asset's value has been used up over a period.