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A2 EXCEL DRAFT - Assignment Example

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The cost benefit analysis is aimed at changing the way benefits are provided on an experimental basis. An experiment (pilot) study was carried on the human resource department of…
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Download file to see previous pages These figures provided the basis for calculation of the individual employee earnings, contributions and benefits as well as the FICA deductions. To provide a cost benefit analysis, both the expenditures incurred by the department and the benefits translated to savings must be computed.
The personnel based expenditures include the salaries and wages and Employee benefits contributed by the department. Values for these two items are obtained from the 2014 adopted budget. The company is obliged to make social security contribution of 6.2% and Medicare contribution of 1.45% of the salaries and wages respectively. Additionally, each employee is given a retirement related benefit of 7.5% of salaries and wages. Once these figures are calculated, the recurring costs, one-time costs and recurring savings are calculated based on the assumptions that the pilot experiment will run for a transition period of six months and involves 5 employees only. Additionally, the experiment will be projected for a period of five years after the transitional period. This eventually provides values for present value of costs and the present value of benefits that are then used to calculate the net present Value and the Benefit/cost ratio.
Essentially, the figures used for the calculations were obtained from the adopted budget for the county for the 2014 financial year. According to the report the human resource department has a staff FTE of 14, calculated salaries and wages of $993,967 and employee benefits amounting to $255,692. These figures are used to derive the employee benefits, FICA tax withholdings, social security and Medicare contributions. Social security is computed by multiplying 6.2% (rate of withholding) by the salaries and wages. On the other hand the Medicare contributions are calculated by multiplying the salaries and wages by a withholding rate of 1.45%. It is important to note that all categories of deductions (contributions by employer) except ...Download file to see next pagesRead More
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