Suppose you are the human resource manager for a cellular phone company with600employees. Top management has asked you to implement three additional fringe benefits that were negotiated with employee representatives and agreed upon by a majority of the employees. These include group term life insurance, a group legal services plan, and a wellness center.

The life insurance is estimated to cost $520per employee per quarter. The legal plan will cost $416semiannually per employee. The company will contribute 40% to the life insurance premium and 75% to the cost of the legal services plan. The employees will pay the balance through payroll deductions from their biweekly paychecks. In addition, they will be charged1

4

%

of their gross earnings per paycheck for maintaining the wellness center. The company will pay the initial cost of $800,000to build the center. This expense will be spread over 5 years.

(a)

What total amount should be deductedper paycheckfor these new fringe benefits for an employee earning $62,400per year?

$

(b)

What is the totalannualcost of the new fringe benefits to the company?

$