As of June 30, 2019 (the computation date for the 2020 tax rate), Sanchez Company had a negative balance of $1,190 in its unemployment reserve account in State A. The company’s average payroll over the last three 12-month periods amounted to $520,000. The unemployment compensation law of State A provides that the tax rate of an employer who has a negative balance on the computation date shall be 7.2% during the following calendar year.

Using the tax rate schedule presented in Problem 5-12A, compute:

a. The smallest voluntary contribution that Sanchez Company should make in order to
effect a change in its tax rate............................................................................................... $

b. The amount of the tax savings as a result of the voluntary contribution if Sanchez
Company’s taxable payroll for 2020 is $660,000............................................................... $