The least amount of the voluntary contribution needed to qualify the company for the 3.05% SUTA tax rate is approximately $8,858.07.
To qualify for the 3.05% SUTA tax rate, the least amount of the voluntary contribution needed can be calculated as follows:
The current reserve ratio is 11.78%, which falls into the state's 10% to less than 12% category. To qualify for the 3.05% SUTA tax rate, the reserve ratio needs to fall into the 12% to less than 14% category.
Let X be the amount of the voluntary contribution needed to achieve a reserve ratio of 12%. The current reserve ratio is 11.78%, and the total payroll is $3,521,790. The total payroll needed to achieve a reserve ratio of 12% can be calculated as follows:
X + $414,867 / ($3,521,790 + X) = 12%
X + $414,867 = 0.12 * ($3,521,790 + X)
X + $414,867 = $422,654.8 + 0.12X
0.88X = $7,787.8
X = $7,787.8 / 0.88
X ≈ $8,858.07
Therefore, the least amount of the voluntary contribution needed to qualify the company for the 3.05% SUTA tax rate is approximately $8,858.07.
Complete 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.