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As of June 30, 2021 (the computation date for the 2022 tax rate), Sanchez Company had a negative balance of $1,190 in its unemployment reserve

As of June 30, 2021 (the computation date for the 2022 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 $500,000. 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 below, compute the following:

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%

a. The smallest voluntary contribution that Sanchez Company should make in order to effect a change in its tax rate. $fill in the blank 1

b. The amount of the tax savings as a result of the voluntary contribution if Sanchez Company's taxable payroll for 2022 is $640,000. $fill in the blank 2

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