15. What is the correct formula to calculate net (or take-home) pay for an employee for a pay period?

• A. Gross pay plus overtime pay
• B. Total hours worked multiplied by hourly wage
• C. Gross pay minus all deductions (such as taxes and benefits)
• D. Net sales minus cost of goods sold

Answer: (C)

Verified step by step guidance

1. Understand the concept of net (or take-home) pay: Net pay is the amount an employee receives after all deductions are subtracted from their gross pay. Deductions typically include taxes, benefits, and other withholdings.
2. Start with the gross pay: Gross pay is the total earnings before any deductions. It includes regular wages and any additional earnings such as overtime pay.
3. Identify all deductions: Deductions can include federal and state income taxes, Social Security and Medicare taxes, health insurance premiums, retirement contributions, and other voluntary or mandatory deductions.
4. Apply the formula for net pay: The formula is Net Pay = Gross Pay - Total Deductions. In MathML, this can be expressed as: $\mathrm{Net} \mathrm{Pay}=\mathrm{Gross} \mathrm{Pay}-\mathrm{Total} \mathrm{Deductions}$
5. Ensure accuracy: To calculate net pay, carefully subtract all deductions from the gross pay, ensuring that each deduction is accounted for correctly.