1. Since the SUTA rates changes are made at the end of each year, the available 2019 rates were used for FUTA and SUTA.

   Note: For this textbook edition the rate 0.6% was used for the net FUTA tax rate for employers.

   Example 5-10

   Karlson Software Company is located in State H, which enables employers to reduce their contribution rates under the experience-rating system. From 2006 to 2015, inclusive, the company's total contributions to state unemployment compensation amounted to $14,695. For the calendar years 2016 to 2019, inclusive, the contribution rate for Karlson was 2.7%.

   The contributions of each employer are credited to an account maintained by the State Unemployment Compensation Commission. This account is credited with contributions paid into the account by the employer and is charged with unemployment benefits that are paid from the account. Starting January 1, 2020, the contributions rate for all employers in State H will be based on the following tax rate schedule:

   Reserve Ratio	Contribution Rate
   Contributions falling below benefits paid	7.0%
   0.0% to 7.9%	5.5%
   8.0% to 9.9%	4.5%
   10.0% to 11.9%	3.5%
   12.0% to 14.9%	2.5%
   15.0% or more	1.5%

   The annual payroll for calculation purposes is the total wages payable during a 12-month period ending with the last day of the third quarter of any calendar year. The average annual payroll is the average of the last three annual payrolls. The SUTA tax rate for the year is computed using the information available (benefits received and taxes paid) as of September 30 of the preceding year.

   The schedule below shows the total payroll and the taxable payroll for the calendar years 2016 to 2019.

   	Calendar Year
   	2016		2017		2018		2019
   	Total Payroll	Taxable Payroll	Total Payroll	Taxable Payroll	Total Payroll	Taxable Payroll	Total Payroll	Taxable Payroll
   First Quarter	$12,000	$12,000	$11,000	$11,000	$13,000	$13,000	$10,000	$10,000
   Second Quarter	11,750	11,750	11,500	11,400	12,750	12,700	9,300	9,300
   Third Quarter	12,500	12,250	12,750	12,400	12,200	12,000	9,350	9,350
   Fourth Quarter	13,000	12,500	12,500	12,200	14,000	13,750

   Unemployment benefits became payable to the company's qualified unemployed workers on January 1, 2006. Between that time and September 30, 2019, total benefits amounting to $15,100.90 were charged against the employer's account. Compute:

   In your computations, round amounts to the nearest cent. Round your final percentage answers to one decimal place.

   a. Contribution rate for 2020. %

   b. Rate for 2020 if $2,000 additional benefits had been charged by mistake to the account of Karlson Software Company by the State Unemployment Compensation. %