The following unemployment tax rate schedule is in effect for the calendar year 2019 in State A, which uses thereserve-ratio formula in determining employer contributions:Reserve Ratio Contribution Rate0.0% or more, but less than 1.0% ............................ 6.7%1.0% or more, but less than 1.2% ............................ 6.4%1.2% or more, but less than 1.4% ............................ 6.1%1.4% or more, but less than 1.6% ............................ 5.8%1.6% or more, but less than 1.8% ............................ 5.5%1.8% or more, but less than 2.0% ............................ 5.2%2.0% or more, but less than 2.2% ........................... 4.9%2.2% or more, but less than 2.4% ........................... 4.6%2.4% or more, but less than 2.6% ........................... 4.3%2.6% or more, but less than 2.8% ........................... 4.0%2.8% or more, but less than 3.0% ............................ 3.7%3.0% or more, but less than 3.2% ............................ 3.4%3.2% or more ........................................................... 3.1%Hyram Company, which is located in State A, had an average annual payroll of $850,000 for the three 12-month periods ending on June 30, 2018 (the computation date for the tax year 2019). As of June 30, 2018, the total contributions thathad been made to Hyram Company’s reserve account, in excess of the benefits charged, amounted to $17,440. Compute:a. Hyram Company’s reserve ratio for 2018 .................................................................. %b. 2019 contribution rate for the company .................................................................... %c. Smallest contribution that the company can make in order to reduce itstax rate if State A permits voluntary contributions..................................................... $d. Tax savings realized by the company, taking into consideration the voluntarycontribution made in (c) if the taxable payroll in 2019 is $980,000 .......................... $
The following
reserve-ratio formula in determining employer contributions:
Reserve Ratio Contribution Rate
0.0% or more, but less than 1.0% ............................ 6.7%
1.0% or more, but less than 1.2% ............................ 6.4%
1.2% or more, but less than 1.4% ............................ 6.1%
1.4% or more, but less than 1.6% ............................ 5.8%
1.6% or more, but less than 1.8% ............................ 5.5%
1.8% or more, but less than 2.0% ............................ 5.2%
2.0% or more, but less than 2.2% ........................... 4.9%
2.2% or more, but less than 2.4% ........................... 4.6%
2.4% or more, but less than 2.6% ........................... 4.3%
2.6% or more, but less than 2.8% ........................... 4.0%
2.8% or more, but less than 3.0% ............................ 3.7%
3.0% or more, but less than 3.2% ............................ 3.4%
3.2% or more ........................................................... 3.1%
Hyram Company, which is located in State A, had an average annual payroll of $850,000 for the three 12-month periods ending on June 30, 2018 (the computation date for the tax year 2019). As of June 30, 2018, the total contributions that
had been made to Hyram Company’s reserve account, in excess of the benefits charged, amounted to $17,440. Compute:
a. Hyram Company’s reserve ratio for 2018 .................................................................. %
b. 2019 contribution rate for the company .................................................................... %
c. Smallest contribution that the company can make in order to reduce its
tax rate if State A permits voluntary contributions..................................................... $
d. Tax savings realized by the company, taking into consideration the voluntary
contribution made in (c) if the taxable payroll in 2019 is $980,000 .......................... $
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