Question

Sparks Company's SUTA rate for next year is 3.25% because its reserve ratio falls into the state's 10% to less than 12% category [(contributions - benefits paid) ÷ average payroll = $414,867 ÷ $3,521,790 = 11.78%]. If the next bracket (12% to less than 14%) would give the company a lower tax rate of 3.05%, what would be the least amount of the voluntary contribution needed to qualify the company for the 3.05% SUTA tax rate? Round your answer to two decimal places.

Answer 1

$7,747.8

Step-by-step explanation:

Given:

Average payroll = $3,521,790

Initial (contributions - benefits paid) = $414,867

Now,

Minimum contribution amount to qualify for bracket 12% to less than 14%

also,

[contributions- benefits paid] = Percentage × average payroll

or

[contributions- benefits paid] = 12% × $3,521,790

or

[contributions- benefits paid] = $422,614.8

so the required ( contributions- benefits paid ) is $422,614.8

Thus,

The Company have to pay the difference of

= [ required ( contributions- benefits paid ) ] - [ Initial (contributions - benefits paid) ]

= $422,614.8 - $414,867

= $7,747.8