Compensation professionals are called upon to develop and adjust compensation policies to ensure competitiveness by hiring and retaining the best employees. Now more than ever, compensation professionals' are faced with stagnant or shrinking resources, which makes their work even more challenging. It is essential that compensation professionals understand the allocation of costs to various components of total compensation as well as the impact of reallocation of resources on the compensation mix.

	Cost	Percent
Total Compensation	$36	100%
Wages/Salaries		80% (of Total Compensation)
Employee Benefits		20% (of Total Compensation)
Discretionary		76% (of Employee Benefits)
Legally-Required		24% (of Employee Benefits)

Part 2

Assuming that the hourly total compensation cost is

$36:

a) The total cost in dollars for wages and salaries is

$28.8028.80.

Round your response to the nearest hundredths place.

b) The total cost in dollars for all employee benefits is

$7.207.20.

Round your response to the nearest hundredths place.

c) The total cost in dollars for discretionary employee benefits is

$5.475.47.

Round your response to the nearest hundredths place.

d) The total cost in dollars for legally required benefits is

$1.731.73.

Round your response to the nearest hundredths place.

Part 3

The company wants to increase the hourly wage and salary amount by

7

percent, while keeping total compensation per hour at

36.

The company will reduce the total cost of employee benefits in order to cover the wages and salaries increase amount.

a) The new total cost in dollars for wages and salaries will be

$30.8230.82.

Round your response to the nearest hundredths place.

b) The new total cost in dollars for all employee benefits is

$5.185.18.

Round your response to the nearest hundredths place.

c) The new total cost in dollars for legally required benefits is

$1.731.73.

Round your response to the nearest hundredths place.

d) The new total cost in dollars for discretionary benefits is

$3.453.45.

Round your response to the nearest hundredths place.

Part 4

The company wants to increase the discretionary benefits amount per hour by

5

percent, while keeping total compensation per hour at

36.

The company will reduce the total cost of wages and salaries per hour in order to cover the discretionary benefits increase amount.

a) The new total cost in dollars for legally required benefits is

$enter your response here.

Round your response to the nearest hundredths place.

b) The new total cost in dollars for legally required benefits represents

enter your response here%

of total compensation cost. Round your response to the nearest percent.

c) The new total cost in dollars for discretionary benefits is

$enter your response here.

Round your response to the nearest hundredths place.

d) The new total cost in dollars for discretionary benefits represents

enter your response here%

of total compensation cost. Round your response to the nearest percent.

e) The new total cost in dollars for wages and salaries is

$enter your response here.

Round your response to the nearest hundredths place.

f) The new total cost in dollars for wages and salaries represents

enter your response here%

of total compensation cost. Round your response to the nearest percent.