Discu1. What is the difference between an allowance and a rebursement? How does this difference affect labor burden?2. Why are the social security and Medicare taxes paid bythe employee not included in labor burden?How does employee turnover affect the labor burden costs?4. What can a company do to reduce its workers' compen-sation insurance costs?Problems5. Determine the annual cost, average hourly cost, andburden markup of an hourly employee given the infor-mation in Table 8-1. Assume the employee takes fulladvantage of the 401(k) benefit. The employee's healthinsurance is paid for entirely by the employer. Last yearthe employee worked 2,104 hours and was paid for anadditional 80 hours of vacation. The employee was paidfor at least 40 hours each week and is to be paid timeand a half on any work over 40 hours per week.Table 8-1 Wage Information for Problem 5ItemWagesBonusAllowancesSocial SecurityMedicareFUTASUTAWorkers' Comp.General Liability401(k)Health InsuranceCost$22.00/hr$500None6.2% of wages to $128,7001.45% of wages0.6% of wages to $7,0002.0% of wages to $20,000$0.85 per $100 of wages0.65% of wages50% match up to 6% of wages$200/monthWorkGeneral Liability401(k)Health Insuranc7. Set up a workage hourly coemployee. Ththe hourly waeach week, r($/year), moemployee exrity and Meand limit, Nrate and limcompensatpercentagely health iand otherfull advanagainst E8. Set up amonthlyployee.annual s($/montsubjectrity perFUTAand limgeneralimit,paymeployeyour a

Annual Cost: Wages: $22.00/hr x 2,104 regular hours = $46,288 Bonus: $500 Vacation Pay: $22.00/hr…

Answered: Problems 5. Determine the annual cost,…

Problems 5. Determine the annual cost, average hourly cost, and burden markup of an hourly employee given the infor- me the employee takes full health

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Discu
1. What is the difference between an allowance and a re
bursement? How does this difference affect labor burden?
2. Why are the social security and Medicare taxes paid by
the employee not included in labor burden?
How does employee turnover affect the labor burden costs?
4. What can a company do to reduce its workers' compen-
sation insurance costs?
Problems
5. Determine the annual cost, average hourly cost, and
burden markup of an hourly employee given the infor-
mation in Table 8-1. Assume the employee takes full
advantage of the 401(k) benefit. The employee's health
insurance is paid for entirely by the employer. Last year
the employee worked 2,104 hours and was paid for an
additional 80 hours of vacation. The employee was paid
for at least 40 hours each week and is to be paid time
and a half on any work over 40 hours per week.
Table 8-1 Wage Information for Problem 5
Item
Wages
Bonus
Allowances
Social Security
Medicare
FUTA
SUTA
Workers' Comp.
General Liability
401(k)
Health Insurance
Cost
$22.00/hr
$500
None
6.2% of wages to $128,700
1.45% of wages
0.6% of wages to $7,000
2.0% of wages to $20,000
$0.85 per $100 of wages
0.65% of wages
50% match up to 6% of wages
$200/month
Work
General Liability
401(k)
Health Insuranc
7. Set up a work
age hourly co
employee. Th
the hourly wa
each week, r
($/year), mo
employee ex
rity and Me
and limit, N
rate and lim
compensat
percentage
ly health i
and other
full advan
against E
8. Set up a
monthly
ployee.
annual s
($/mont
subject
rity per
FUTA
and lim
genera
limit,
payme
ploye
your a

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