Question

Caruso Company's SUTA rate for next year is 2.9% because its reserve ratio falls in its state's 8% to less than 10% category [(contributions – benefits paid) ÷ average payroll = $93,500 ÷ $971,500 = 9.62%]. If the next category (10% to less than 12%) would give Caruso a lower tax rate of 2.3%, what would be the amount of the voluntary contribution needed to get Caruso to that next category? $

Answer 1

voluntary contribution $97150

Step-by-step explanation:

data provided:

tax rate: 2.3%

reserve ratio- 8-10%

average payroll = $971,500

Assume voluntary contribution ="X "

From the information given in the question we have

`(X)/(971500) = 10`%

here we have taken max reserve ratio i.e. 10%

= $97150

we know that, from the question present contribution minus benefit is equal to $93,500

hence, extra contribution = 97150 - 93500 = $3650

extra contribution = $3650