Answered: Suppose you are the human resource…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Question

Suppose you are the human resource manager for a cellular phone company with 900 employees. Top management has asked you to implement three additional fringe benefits that were negotiated with employee representatives and agreed upon by a majority of the employees. These include group term life insurance, a group legal services plan, and a wellness center.

The life insurance is estimated to cost $780 per employee per quarter. The legal plan will cost $364 semiannually per employee. The company will contribute 40% to the life insurance premium and 75% to the cost of the legal services plan. The employees will pay the balance through payroll deductions from their biweekly paychecks. In addition, they will be charged

of their gross earnings per paycheck for maintaining the wellness center. The company will pay the initial cost of $600,000 to build the center. This expense will be spread over 5 years.

(a)

What total amount should be deducted per paycheck for these new fringe benefits for an employee earning $93,600 per year?

(b)

What is the total annual cost of the new fringe benefits to the company?

Definition Definition Benefits in addition to compensation that companies give to their employees. Fringe benefits can boost morale and productivity and keep employees motivated. Companies often use fringe benefits as a competitive advantage to recruit and retain employees. Examples of fringe benefits include pensions, vacation time, tuition reimbursement, free or subsidized meals, and gym memberships.

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