6. There has been a recent trend toward the use of signing bonuses in multi-ycar
ID: 371104 • Letter: 6
Question
6. There has been a recent trend toward the use of signing bonuses in multi-ycar agreements. These signing bonuses are one-time payments that are not added to an employee's base salary. As one example, the recent collective agreement for the transit drivers in Halifax consisted of a $1,500 signing bonus in year 1 and 2.25 per cent a year for the next four years (effrey, 2012). Let's assume that 800 employees are covered by this agreement, the average annual salary is S65,000 per employee, and the current total payroll is S52 million (800 employees at $65,000 per year). (a) Calculate the transit service's annual total payroll cost at the end of the newly negotiated, five-year collective agreement. (b) Assume that the agreement was a 51,500 addition to base pay in year 1,and then 2.25 percent for the next four years. Calculate the transit service's annu payroll cost at the end of the five-year agreement.Explanation / Answer
(a) Total payroll cost at the end of the five years = ( Total salary cost + Signing bonus ) over 5 years = 800*65000*(5+0.0225*4) + 800*1500 = $ 265,880,000
(b) Total payroll cost = 800*(65000+1500) + 800*65000*4 + 800*(65000+1500)*0.0225*4 = $ 265,988,000
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.