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Unformatted text preview: All employees of United Company are covered by a group hospitalization insurance plan, but the employees must pay the premiums ($8,000 for each employee). None of the employees has sufficient medical expenses to deduct the premiums. Instead of giving raises next year, United is considering paying the employee’s hospitalization insurance premiums. If the change is made, the employee’s after-tax and insurance pay will: Answer a . Increase by the same amount for all employees. b . Increase more for the highly paid employees (35% marginal tax bracket). c.Increase more for the low income (10% and 15% marginal tax bracket) employees. d . Decrease by the same amount for all employees. e . None of the above. Under the Swan Company’s cafeteria plan, all full-time employees are allowed to select any combination of the benefits below, but the total received by the employee cannot exceed $8,000 a year. I. Group medical and hospitalization insurance for the employee, $3,600 a year. I I. Group medical and hospitalization insurance for the employee’s spouse and children, $1,200 a year. I I I. Child-care payments, actual cost but not more than $4,800 a year. IV. Cash required to bring the total of benefits and cash to $8,000. Which of the following statements is true?...
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This note was uploaded on 03/03/2011 for the course ACCT 3391 taught by Professor Turpin during the Spring '10 term at Troy.
- Spring '10