Question

McCoppin Industries has three employees: Dean, Annie and Kent. Dean works entirely in State A and was paid a salary of $130,000 plus a $30,000 bonus. Annie works entirely in State B and was paid a salary of $50,000. Kent works 60% of the time in State A and 40% of the time in State B and was paid $100,000 in commissions. Calculate McCoppin's payroll factor for State A

Answer 1

All of Dean's compensation must be included in State A = $130,000 + $30,000 = $160,000

None of Annie's compensation is included in State B = $0

Kent's compensation is also included in State A since the majority of hiss ales are carried out there = $100,000

total payroll allocated to State A = $260,000

payroll factor = $260,000 / ($260,000 + $50,000) = 83.87% = 84%