Reference no: EM13913754
The following unemployment tax rate schedule is in effect for the calendar year 2013 in State A, which uses the reserve ratio formula in determining employer contributions:
Reserve Ratio Contribution Rate
0.0% or more, but less than 1.0% . . . . . . . . . . . . . . . . . . . . 6.7%
1.0% or more, but less than 1.2% . . . . . . . . . . . . . . . . . . . . 6.4%
1.2% or more, but less than 1.4% . . . . . . . . . . . . . . . . . . . . 6.1%
1.4% or more, but less than 1.6% . . . . . . . . . . . . . . . . . . . . 5.8%
1.6% or more, but less than 1.8% . . . . . . . . . . . . . . . . . . . . 5.5%
1.8% or more, but less than 2.0% . . . . . . . . . . . . . . . . . . . . 5.2%
2.0% or more, but less than 2.2% . . . . . . . . . . . . . . . . . . . . 4.9%
2.2% or more, but less than 2.4% . . . . . . . . . . . . . . . . . . . . 4.6%
2.4% or more, but less than 2.6% . . . . . . . . . . . . . . . . . . . . 4.3%
2.6% or more, but less than 2.8% . . . . . . . . . . . . . . . . . . . . 4.0%
2.8% or more, but less than 3.0% . . . . . . . . . . . . . . . . . . . . 3.7%
3.0% or more, but less than 3.2% . . . . . . . . . . . . . . . . . . . . 3.4%
3.2% or more . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1%
Conrad Company, which is located in State A, had an average annual payroll of $1,150,000 for the three 12 month periods ending on June 30, 2012 (the computation date for the tax year 2013). As of June 30, 2012, the total contributions that had been made to Conrad Company's reserve account, in excess of the benefits charged, amounted to $21,560. Compute:
a. Conrad Company's reserve ratio for 2012 . . . . . . . . . . . . . . . . . . .________________ %
b. 2013 contribution rate for the company . . . . . . . . . . . . . . . . . . .__________________ %
c. Smallest contribution that the company can make in order to reduce its tax rate if State A permits voluntary contributions . . . ........ $_________
d. Tax savings realized by the company, taking into consideration the voluntary contribution made in (c) if the taxable payroll in 2013 is $1,295,000 . . . . . . . . . . . $
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