Question

You have two employees who report directly to you one is making $36,000 per year in the second is making $24,000 per year you feel the second employee has done outstanding work and you want to give her a $3000 per year raise the company has limited you to a total increase in payroll of 5% for next year how much of a raise can you afford to give to the first employee if you give it to second employee a $3000/ year raise

Answer 1

After giving the second employee a $3,000 raise, there will be no additional funds available for a raise for the first employee if you are limited to a total payroll increase of 5%, which equals $3,000 for both employees combined.

Step-by-step explanation:

To calculate the raise you can afford to give the first employee after giving the second employee a $3,000 raise, first, we need to determine the total current payroll for the two employees and the total allowable payroll increase.

The total current annual payroll for the two employees is $36,000 + $24,000 = $60,000. A 5% increase in payroll allows for a total raise amount of 0.05 x $60,000 = $3,000. Since you are giving the second employee a $3,000 raise, there would be no additional funds available for a raise for the first employee within the 5% limit.

However, if there was a specific requirement to provide some raise to the first employee as well, you would need to give the second employee less than a $3,000 raise to stay within the 5% payroll increase limit.