Identify All Correct Statements Concerning Payrolls and Related Payroll Costs

question 12

Multiple Choice

Identify all correct statements concerning payrolls and related payroll costs:

• A) Both employers and employees pay Social Security and Medicare taxes.
• B) Workers' compensation premiums are withheld from employees' wages.
• C) An employer's total payroll costs usually exceed total wages expense by about 7 1/2%.
• D) Under current law, employers are required to pay Social Security taxes on employees' earnings, but are not required to pay for health insurance.

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Definitions:

Contribution Margin

The profit remaining after variable costs have been subtracted from revenue, indicating how much contributes to covering fixed costs and generating profit.

Variable Cost

Variable costs are expenses that change in proportion to the activity of a business, such as materials and labor costs.

Fixed Manufacturing Overhead

Consists of production costs that do not change with the volume of manufacturing activity, such as rent for the manufacturing facilities or salaries of plant managers.

Deferred

Postponed or delayed, often referring to expenses or revenues that are recognized at a date later than when they were incurred or earned.