ITEC 136 Homework 3 Name: _____________________

ITEC 136 Homework 3 Name: _____________________

In a separate JS file, write a function to calculate gross wages for an hourly employee. The function should receive two parameters: the pay rate (dollars per hour, a floating point number) and the hours worked. Hours from 0 through 40 are “straight time” pay, and any hours in excess of 40 are overtime pay at 1.5 times the standard rate (hint: use the ? : operator to make a decision about pay rates). The function should return a floating point number representing the gross pay amount.

In a separate JS file, write a function to compute the amount of taxes that should be withheld from a paycheck based on the gross pay. The function should receive one parameter, the gross pay. Withholdings are calculated based on the following table: Category Percentage Federal taxes 31% State taxes 8% Local taxes 2%. All local taxes are deductible from the gross amount used to calculate state taxes. Likewise, all state and local taxes are deductible from the gross amount used to calculate federal taxes. The function should accept one parameter, the gross pay, and return one result, the total withholdings based on the above table and rules. The function should not do any output, only return a number.

Paper For Above instruction

Calculating gross wages and tax withholdings are fundamental tasks in payroll management, and understanding their computation is essential for ensuring accurate employee compensation and compliance with tax regulations. This essay explores the methodologies to calculate gross wages for hourly employees, including the nuances of overtime pay, and to compute the appropriate tax withholdings from the gross pay, considering federal, state, and local tax deductions.

Gross Wages Calculation for Hourly Employees

The calculation of gross wages for hourly employees involves determining the total pay based on hours worked and the pay rate per hour. The primary complexity arises from overtime pay, which is applicable when hours exceed 40 in a workweek. The standard pay rate applies to the first 40 hours, while any additional hours are compensated at 1.5 times the regular rate, commonly known as time-and-a-half.

To implement this calculation programmatically, a JavaScript function can be designed. This function takes two parameters: the pay rate and the hours worked. It uses the ternary (?:) operator to efficiently decide whether the employee has worked overtime. If hours are less than or equal to 40, gross pay is straightforward: hours multiplied by the pay rate. If hours exceed 40, gross pay includes 40 hours at the standard rate plus the overtime hours at 1.5 times the rate.

Mathematically, the gross pay (GP) can be expressed as:

  • GP = (hours payRate : (40 payRate) + ((hours - 40) payRate 1.5)

This approach ensures flexibility and correctness for any work hours input, with the function returning the computed gross pay as a floating-point number. The function should not produce any output directly but serve solely as a calculator returning a value.

Tax Withholding Computation

Tax withholdings depend on the gross pay and are influenced by the deductions applicable at different government levels. The calculation must consider the interdependent nature of these taxes—local, state, and federal—where each is deducted sequentially from the gross pay, with the subsequent taxes calculated from the reduced base.

Initially, local taxes are computed at 2% from the gross pay. This amount is deducted first, leaving a revised gross for subsequent calculations. Next, the state taxes are computed at 8%, but from the amount after local taxes are deducted. Finally, federal taxes at 31% are calculated from the amount remaining after both local and state taxes are deducted.

Mathematically, the total withheld can be expressed as the sum of three parts:

  1. Local taxes: 2% of gross pay
  2. State taxes: 8% of (gross pay - local taxes)
  3. Federal taxes: 31% of (gross pay - local taxes - state taxes)

The total withholding is, therefore, the sum of these three deductions, each rounded to the nearest penny to ensure accuracy. Rounding can be achieved using JavaScript's Number.prototype.toFixed() method or by applying Math.round() with appropriate scaling.

This method ensures the calculation adheres to the detailed rules: each subsequent tax deduction is based on the remaining gross after previous deductions, and the total withholdings accurately reflect the combined tax burden.

Implementation Considerations

The functions should strictly avoid producing any output to the document or alerting the user; they should solely perform calculations and return the numeric results. This separation of concerns facilitates integration into larger systems or user interfaces that can handle the display of results.

Moreover, implementing proper rounding is crucial for precise financial calculations. Using the .toFixed() method converts the number to a string, which can then be parsed back to a number, or Math.round() can be used with scaling (multiplying, rounding, then dividing) to preserve the number as a float with accurate cents.

Conclusion

In conclusion, calculating gross earnings with overtime considerations and accurately computing tax withholdings are vital for payroll processing. The use of conditional expressions like the ternary operator streamlines gross wage calculation, while sequential deduction calculations based on remaining gross pay ensure compliance with tax rules. Proper rounding ensures that the financial figures are precise to the cent, preserving integrity and trustworthiness in payroll systems.

References

  • Brigham, E. F., & Ehrhardt, M. C. (2016). Financial Management: Theory & Practice. Cengage Learning.
  • Internal Revenue Service. (2023). Publication 15-T: Federal Income Tax Withholding Methods. IRS.gov.
  • Wikipedia contributors. (2023). Overtime pay. Wikipedia. https://en.wikipedia.org/wiki/Overtime_pay
  • Harrison, M., & Horngren, C. T. (2013). Financial & Managerial Accounting. Pearson.
  • U.S. Department of Labor. (2023). Fair Labor Standards Act (FLSA). DOL.gov.
  • OECD. (2020). Tax Administration and Compliance. OECD Publishing.
  • Johnson, H. T., & Grewe, W. (2020). Managerial Accounting. Pearson Education.
  • Hamlen, W. (2019). Payroll Accounting. McGraw-Hill Education.
  • Nicholson, S. (2018). Principles of Business Finance. Routledge.
  • Tax Foundation. (2022). Overview of Federal and State Taxation. TaxFoundation.org.

Related Assignments