A Michigan company consists of three subsidiaries. Each has the respective average payroll, unemployment reserve fund, and estimated payroll shown in the table below (all figures are in millions of dollars). Any employer in the state of Michigan whose reserve to average payroll ratio is less than 1 must pay 25% of its estimated payroll in unemployment insurance premiums. Otherwise, if the ratio is at least one, the employer pays 13%. The company can aggregate its subsidiaries and label them as separate employers. For example, if subsidiaries 1 and 2 are aggregated, they must pay 25% of their combined payroll in unemployment insurance premiums. Determine which subsidiaries should be aggregated.

Question

Quizplus · Accepted Answer

The Answer of A Michigan company consists of three subsidiaries. Each has the respective average payroll, unemployment reserve fund, and estimated payroll shown in the table below (all figures are in millions of dollars). Any employer in the state of Michigan whose reserve to average payroll ratio is less than 1 must pay 25% of its estimated payroll in unemployment insurance premiums. Otherwise, if the ratio is at least one, the employer pays 13%. The company can aggregate its subsidiaries and label them as separate employers. For example, if subsidiaries 1 and 2 are aggregated, they must pay 25% of their combined payroll in unemployment insurance premiums. Determine which subsidiaries should be aggregated.

A Michigan Company Consists of Three Subsidiaries