Question

Reserve Ratio	Contribution Rate
Contributions falling below benefits paid	7.0%
0.0% to 7.9%	5.5%
8.0% to 9.9%	4.5%
10.0% to 11.9%	3.5%
12.0% to 14.9%	2.5%
15.0% or more	1.5%

The annual payroll for calculation purposes is the total wages payable during a 12-month period ending with the last day of the third quarter of any calendar year. The average annual payroll is the average of the last three annual payrolls. The SUTA tax rate for the year is computed using the information available (benefits received and taxes paid) as of September 30 of the preceding year.

The schedule below shows the total payroll and the taxable payroll for the calendar years 2015 to 2018.

	Calendar Year
	2015		2016		2017		2018
	Total Payroll	Taxable Payroll	Total Payroll	Taxable Payroll	Total Payroll	Taxable Payroll	Total Payroll	Taxable Payroll
First Quarter	$12,000	$12,000	$11,000	$11,000	$13,000	$13,000	$10,000	$10,000
Second Quarter	11,750	11,750	11,500	11,400	12,750	12,700	9,300	9,300
Third Quarter	12,500	12,250	12,750	12,400	12,200	12,000	9,350	9,350
Fourth Quarter	13,000	12,500	12,500	12,200	14,000	13,750	—	—

Unemployment benefits became payable to the company's qualified unemployed workers on January 1, 2005. Between that time and September 30, 2018, total benefits amounting to $23,194.15 were charged against the employer's account. Hint: First total each year's taxable payroll. Using those numbers and SUTA rate you can figure out how much has been paid into the reserve from 2005-2018 and deduct benefits paid to get the balance in the reserve account as of 9/30. Compute rate for 2019 by dividing balance in reserve by average of last three years payroll.

In your computations, round amounts to the nearest cent. When required, round your final percentage answers to one decimal place.

a. Contribution rate for 2019.
%

b. Rate for 2019 if $2,000 additional benefits had been charged by mistake to the account of Applebaum Security Company by the State Unemployment Compensation Commission. Hint: Compare total reserve for 9/30/18 that you already calculated and compare it to benefits paid (add $2,000). On table, what tax rate corresponds to balance in reserve account now?
%

Answer 1

	year	Total Taxable Payroll	Suta Rate	State Contribution	Fedral Tax 0.6% of Total taxable payroll	Total unemployment Tax
	2015	$48,500	2.70%	$1,309.50	$291.0	$1,600.50
	2016	$47,000	2.70%	$1,269.00	$282.0	$1,551.00
	2017	$51,450	3.40%	$1,749.30	$308.7	$2,058.00
	2018	$28,650	3.70%	$1,060.05	$171.9	$1,231.95
Computation of contribution Rate
Total Contribution
2005 to 2018	$14,695
2012	$1,309.50
2013	$1,269.00
2014	$1,749.30
2015	$1,060.05
Less: Benefit Paid	$15,100.90
Balance in reserve account 9/30/18	$4,981.95
Annual payroll period ending 9/30/016	($12500+11000+11400+12400)	47300
Annual payroll period ending 9/30/17	($12200 + 13000+ 12700+12000)	49900
Annual payroll period ending 9/30/018	($13750+10000+9300+9350)	42400
TotaAnnual payroll for 3 years		139600
Average = $139600/3	$46,533.33
contribution Rate = Balance in reserve account 9/30/18/Average Annual payroll
contribution rate	10.71%
Since the reserve is 10.71 percent of the average annual payroll, the tax rate for 2019 is 3.5 percent(the ratio is between 10% and 11.9%).
b.
Computation of contribution Rate
Total Contribution
2005 to 2018	$14,695
2015	$1,309.50
2016	$1,269.00
2017	$1,749.30
2018	$1,060.05
Less: Benefit Paid	$15,100.90
Less: additional Benefit Paid	$2,000.00
Balance in reserve account 9/30/18	$2,981.95
Annual payroll period ending 9/30/016	($12500+11000+11400+12400)	47300
Annual payroll period ending 9/30/017	($12200 + 13000+ 12700+12000)	49900
Annual payroll period ending 9/30/18	($13750+10000+9300+9350)	42400
TotaAnnual payroll for 3 years		139600
Average = $139600/3	$46,533.33
contribution Rate = Balance in reserve account 9/30/18/Average Annual payroll
contribution rate	6.41%
Since the reserve is 6.41 percent of the average annual payroll, the tax rate for 2019 is 5.5 percent(the ratio is between 0% and 7.9%).

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