Unit Manufacturing Costs $2,445 Unit Variable Marketing Costs $1045 March 1 Hosp
ID: 2364055 • Letter: U
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Unit Manufacturing Costs $2,445 Unit Variable Marketing Costs $1045 March 1 Hospital Supply has an offer made by the govt. to supply 500 units. Hospital Supply plans to provide 4,000 units during March. If the contract is accepted, 500 units normally sold to customers would go to competitors. The contract would reimburse the govt share of March production cost and pay a fixed fee (profit) of $275,000. (There would not be any Variable Marketing costs with the govt contract). What impact would accepting the government contract have on March Income?Explanation / Answer
What is a salary sacrifice arrangement? A salary sacrifice arrangement is also commonly referred to as salary packaging or total remuneration packaging. It is an arrangement between an employer and an employee, where the employee agrees to forgo part of their future entitlement to salary or wages in return for the employer providing them with benefits of a similar value. What are the requirements for an effective salary sacrifice arrangement? Arrangement before you perform the work If the arrangement is put into place after the work has been performed, the salary sacrifice arrangement may be ineffective. Agreement between you and your employer It is advisable that you and your employer clearly state and agree on all the terms of any salary sacrifice arrangement. The contract is usually in writing, but may be a verbal one. If you enter into an undocumented salary sacrifice arrangement, you may have difficulty establishing the facts of your agreement. Subject to the terms of any contract of employment or industrial agreement, employees can renegotiate a salary sacrifice arrangement at any time. Where you have a renewable contract, you can renegotiate amounts of salary or wages to be sacrificed before the start of each renewal. The contract of employment includes details of your remuneration, including any salary sacrifice arrangement. This contract can be varied by agreement between you and your employer.
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