Question

4. First Case Manufacturing Company has annual payroll of $100,000. Voluntary contribution are allowed in the State where this company does business. Total unemployment taxes paid into the State’s unemployment fund amounts to $24,000. Cumulative unemployment benefits paid amounted to $16, 005. Calculate the reserve ratio. Expected taxable wages for the next year will be $150,000. With an 8% reserve ratio, the Company can lower there unemployment taxes by 1%. How much of a voluntary contribution is required? Should the Company make the voluntary contribution? Explain