As of June 30, 2015 ( the computation date for the 2016 tax rate), Sanchez Company had a negative balance of $1,190 in it 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 below:

Reserve Ratio Contribution Rate

0.0% or more, but less than 1.0% 6.7%

1.0% or more, but less than 1.2% 6.4%

1.2% or more, but less than 1.4% 6.1%

1.4% or more, but less than 1.6% 5.8%

1.6% or more, but less than 1.8% 5.5%

1.8% or more, but less than 2.0% 5.2%

2.0% or more, but less than 2.2% 4.9%

2.2% or more, but less than 2.4% 4.6%

2.4% or more, but less than 2.6% 4.3%

2.6% or more, but less than 2.8% 4.0%

2.8% or more, but less than 3.0% 3.7%

3.0% or more, but less than 3.2% 3.4%

3.2% or more 3.1%

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 2016 is $660,000: