Payroll-Related Expenses
Shown Below Is a Summary of the Annual

question 120

Essay

Payroll-related expenses
Shown below is a summary of the annual payroll data of Revere Ironworks:
$\begin{array}{|l|r|r|}\hline \text { Wages and salaried expense (gross pay) } & & \$ 12,250,000 \\\hline \text { Amounts withheld from employee's pay: } & & \\\hline \text { Income taxes } & \$ 650,000 & \\\hline \text { Social Security and medical care } & 500,000 & 1,150,000 \\\hline \text { Payroll taxes expense: } & & \\\hline \text { Social Security and medical care } & 500,000 & \\\hline \text { Unemployment taxes } & 120,000 & 620,000 \\\hline \text { Workers' compensation premiums } & & 450,000 \\\hline \begin{array}{ll}\text { Group health insurance premiums (paid by } \\\text { employer) }\end{array} & & 1,060,000 \\\hline \begin{array}{l}\text { Contributions to employees pension plan (paid by } \\\text { employer and fully funded) }\end{array} & & 450,000 \\\hline \text { Cost of other postretirement benefits: } & & \\\hline \text { Funded } & \$ 200,000 & \\\hline \text { Unfunded } & \underline{350,000} & 550,000 \\\hline\\\hline\end{array}$ (a) Compute Revere's total payroll-related expense for the year. $________________.
(b) Compute the company's cash outlays during the year for payroll-related expense (assume short-term obligations such as insurance premiums and payroll taxes have been paid.) $_______________.
(c) Compute the annual take-home pay of Revere's employees. $________________.
(d) How were the costs of postretirement benefits determined? Which of these amounts results in a liability to Revere Ironworks, and when will this liability be paid? Will the amount of the payments be more or less than the amount now shown as a liability? Explain.

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