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Employee Benefits

SECTION. 13-3. pp. 430-432. Employee Benefits. Key Words to Know. employee benefits (p. 430) Services offered by businesses to employees beyond salary, such as paid vacations, health insurance, and sick leave. Formula. Rate of Benefits = Total Benefits Annual Gross Pay.

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Employee Benefits

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  1. SECTION 13-3 pp. 430-432 Employee Benefits

  2. Key Words to Know employee benefits (p. 430) Services offered by businesses to employees beyond salary, such as paid vacations, health insurance, and sick leave.

  3. Formula Rate of Benefits = Total Benefits Annual Gross Pay

  4. Example 1 The personnel department of Commercial Credit Company is preparing annual reports on employee benefits. Tom Olly total annual benefits are what percent of his annual salary?

  5. Example 1 (cont.) Tom Olly’s Annual salary: $41,340 Weekly salary: $795 Vacation: 2 weeks @ $795/week $1,590.00 Holiday: 8 days @ $159/day $1,272.00 Health insurance: 12 months @ $162.50/mo $1,950.00 Sick leave policy: 30 days @ $159/day $4,770.00 Unemployment insurance: 4.6% × $41,340 $1,901.64 Social Security (FICA): 6.2% × $41,340 $2,563.08 Medicare 1.45% × $41,340 $599.43 Total $14,646.15

  6. Example 1 Answer Step: Find the rate of benefits. Total Benefits ÷ Annual Gross Pay $14,646.15 ÷ $41,340.00 = 0.3542 or 35.4%

  7. Example 2 Compute the rate of employee benefits based on annual gross pay for Tam Olly (from Example 1) if he now receives 3 weeks of vacation. Everything else stays the same.

  8. Example 2 Answer: Step 1 Find the total benefits. Amount for Week + Total Annual of Vacation Benefits $795.00 + $14,646.15 = $15,441.15

  9. Example 2 Answer: Step 2 Find the rate of benefits. Total Benefits ÷ Annual Gross Pay $15,441.15 ÷ $41,340.00 = 0.3735 or 37.4%

  10. 431:1-15

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