Mike's Door Service's Payroll Data for the Second Week of June

question 95

Essay

Mike's Door Service's payroll data for the second week of June included the following:

$\begin{array}{llcc} \text { Employees' gross earrings } &\$ 4,540 \\\end{array}$

Taxable earnings for FICA:
$\begin{array}{llcc} \text { OASDI } & 2,500 \\ \text { Medicare} &4,500\\\end{array}$

Taxable earnings for state unemployment taxes $2,000
Assume the following tax rates:
$\begin{array}{llcc} \text { FIEA-OASDI } &6.2\% \\ \text { FICA-Medicare } &1.45\%\\ \text { State wnemployment } &1.5\%\\\end{array}$

Required: Prepare the payroll tax expense entry.

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Definitions:

Fixed-Coefficient Technology

A production process where input ratios are constant and cannot be substituted for one another in the production process.

Demand Function

A mathematical relationship that describes how the quantity demanded of a good or service varies with changes in its price, and possibly other factors.

Horizontal Labor Supply Curve

A graphical representation suggesting that a worker's willingness to work does not change regardless of wage increases over a certain range.

Monopolist

A single seller in a market who has significant control over the price and supply of a product or service.