Ask a New Question
Menu

Suppose that you work at the Peacock Blue store for 40 hours over five days at a rate of $8.75/hour. You then quit your job. Deductions are FICA (7.65%), federal withholding (12%), and state withholding (8%). Your expenses are transportation at $4.25/day, lunch at $3.85/day, and black slacks required for work at $29.95. How much is your discretionary income for the week?

(1 point)
Responses

$182.77
$182.77

$212.72
$212.72

$233.97
$233.97

$269.55

1 answer

To calculate your discretionary income for the week, we will first determine your gross income, then subtract all deductions and expenses.

Step 1: Calculate Gross Income

You worked 40 hours at a rate of $8.75/hour:

\[ \text{Gross Income} = \text{Hours Worked} \times \text{Hourly Rate} \] \[ \text{Gross Income} = 40 , \text{hours} \times 8.75 , \text{dollars/hour} = 350 , \text{dollars} \]

Step 2: Calculate Deductions

The total deduction percentage (FICA + federal withholding + state withholding) is:

\[ \text{Total Deduction Percentage} = 7.65% + 12% + 8% = 27.65% \]

To calculate the total deductions in dollars:

\[ \text{Total Deductions} = \text{Gross Income} \times \text{Total Deduction Percentage} \] \[ \text{Total Deductions} = 350 \times 0.2765 \approx 96.775 \text{ dollars} \]

Now, subtract the total deductions from the gross income to find net income:

\[ \text{Net Income} = \text{Gross Income} - \text{Total Deductions} \] \[ \text{Net Income} = 350 - 96.775 \approx 253.225 \text{ dollars} \]

Step 3: Calculate Expenses

Next, we will calculate the total expenses for transportation, lunch, and the cost of black slacks:

  1. Transportation Expense: $4.25/day for 5 days: \[ \text{Transportation} = 4.25 \times 5 = 21.25 \text{ dollars} \]

  2. Lunch Expense: $3.85/day for 5 days: \[ \text{Lunch} = 3.85 \times 5 = 19.25 \text{ dollars} \]

  3. Cost of Black Slacks: \[ \text{Slacks} = 29.95 \text{ dollars} \]

Step 4: Total Expenses

Now, sum all the expenses:

\[ \text{Total Expenses} = \text{Transportation} + \text{Lunch} + \text{Slacks} \] \[ \text{Total Expenses} = 21.25 + 19.25 + 29.95 = 70.45 \text{ dollars} \]

Step 5: Calculate Discretionary Income

Finally, subtract your total expenses from your net income to find your discretionary income:

\[ \text{Discretionary Income} = \text{Net Income} - \text{Total Expenses} \] \[ \text{Discretionary Income} = 253.225 - 70.45 \approx 182.775 \text{ dollars} \]

Rounding to two decimal points, we get:

\[ \text{Discretionary Income} \approx 182.77 \text{ dollars} \]

Final Answer

Your discretionary income for the week is $182.77.