Seiko's current salary is $87,500. Her marginal tax rate is 32 percent, and she fancies European sports cars. She purchases a new auto each year. Seiko is currently a manager for Idaho Office Supply. Her friend, knowing of her interest in sports cars, tells her about a manager position at the local BMW and Porsche dealer. The new position pays $73,900 per year, but it allows employees to purchase one new car per year at a discount of $23,400. This discount qualifies as a nontaxable fringe benefit. In an effort to keep Seiko as an employee, Idaho Office Supply offers her a $17,800 raise. Answer the following questions about this analysis. Required: What is the annual after-tax cost to Idaho Office Supply if it provides Seiko with the $17,800 increase in salary? Note: Ignore payroll taxes. b-1. Financially, which offer is better for Seiko on an after-tax basis? b-2. By how much is the offer better for Seiko on an after tax basis? (Assume that Seiko is going to purchase the new car whether she switches jobs or not.) c. What salary would Seiko need to receive from Idaho Office Supply to make her financially indifferent (after taxes) between receiving additional salary from Idaho Office Supply and accepting a position at the auto dealership? Note: Round your intermediate computations to the nearest dollar amount. Complete this question by entering your answers in the tabs below. What is the annual after-tax cost to Idaho Office Supply if it provides Seiko with the $17,800 increase in salary? Note: Ignore payroll taxes. Problem 12-49 (LO 12-1, LO 12-3) (Static) Matt works for Fresh Corporation. Fresh offers a cafeteria plan that allows each employee to receive $15,000 worth of benefits each year. The menu of benefits is as follows: For each of the following independent circumstances, determine the amount of income Matt must recognize and the amount of deduction Fresh may claim: Note: Leave no answer blank. Enter zero if applicable. Required: a. Matt selects the single health insurance benefit and places $10,000 in his 401(k). b. Matt selects the single health insurance benefit, is reimbursed $5,000 for dependent care, and takes the remainder in cash. c. Matt selects the single health insurance benefit and is reimbursed for $10,000 of dependent care. d. Matt gets married and selects the health insurance with spouse benefit and takes the rest in cash to help pay for the wedding. e. Matt elects to take all cash. Complete this question by entering your answers in the tabs below. Matt selects the single health insurance benefit and places $10,000 in his 401(k)
