For the Week Ended May 16,Cheap Printing Company Had a Total

question 144

Essay

For the week ended May 16,Cheap Printing Company had a total payroll of $183,000.Three items are withheld from employee's paychecks: (1)Social Security (FICA)tax of 7.1% of payroll; (2)income taxes,which average 20% of the payroll; and (3)employees' savings that are deposited in their credit union,which are $12,020.In addition,Cheap Printing Company pays (1)Social Security tax equal to the amount withheld from employees,(2)health insurance premiums of $12,750,and (3)contributions to the employees' pension fund of $17,000.
Prepare the journal entries to record the compensation expense and the employee benefit expense.

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Definitions:

Activity-based Costing

A costing method that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each.

Overhead Costs

Indirect costs of running a business that are not directly tied to production, such as rent, utilities, and salaries.

Departmental Overhead Rate

An allocation rate used to assign overhead costs to specific departments based on relevant criteria, such as labor hours or machine hours.

Machine Hours

Machine hours refer to the total operating time of a machine or group of machines during a specific period, used as a basis for allocating costs in manufacturing.