Exercise 10.4 Employees - What Do They Really Cost? (LO10-3)

Big Game, Inc., is a manufacturer of hunting supplies. The following is a summary of the companys annual payroll-related costs:

Wages and salaries expense (of which $2,200,000 was withheld from employees pay and forwarded directly to tax authorities)	$	7,200,000
Payroll taxes		580,000
Workers compensation premiums		250,000
Group health insurance premiums		725,000
Contributions to employees pension plan		450,000

a.	Compute Big Games total payroll-related costs for the year.

b.	Compute the net amount of cash actually paid to employees (their take-home pay).

c-1.	Express total payroll-related costs as a percentage of total wages and salaries expense.

c-2.	Express total payroll-related costs as a percentage of employees take-home pay.