Exam
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the
question.
1)
1)
Under the Fair Labor Standards Act (FLSA), which of the following are not considered exempt
employees?
A)
Administrative employees
B)
Professional employees
C)
Trade personnel
D)
Executives
Answer:
C
A)
B)
C)
D)
2)
2)
Which of the following is not a way for a company to reduce its state unemployment tax (SUTA)
rate?
A)
Hiring temporary workers
B)
Lay employees off
C)
Labor resource leveling
D)
Proper use of overtime
Answer:
B
A)
B)
C)
D)
3)
3)
The cost of the workers’ compensation insurance premium is based on which of the following?
A)
Type of work performed by the employees
B)
Company’s accident history
C)
Gross payroll
D)
All of the above
Answer:
D
A)
B)
C)
D)
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4)
4)
What does a workers’ compensation experience modifier of greater that one indicate?
A)
The experience modifier is not related to losses.
B)
The company had higher than expected losses.
C)
The company had lower than expected losses.
D)
The company’s losses were at the expected level.
Answer:
B
A)
B)
C)
D)
5)
5)
Which of the following insurances would not be included as part of an employee benefits
package?
A)
General liability
B)
Life
C)
Health
D)
Dental
Answer:
A
A)
B)
C)
D)
6)
6)
What is the current Medicare rate paid by employers?
A)
B)
C)
D)
Answer:
C
A)
B)
C)
D)
7)
7)
How does the Fair Labor Standards Act (FLSA) define a work week?
A)
168 hours during seven consecutive 24–hour periods
B)
Sunday through Saturday
C)
Monday through Sunday
D)
Monday through Saturday
Answer:
A
A)
B)
C)
D)
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8)
8)
What is the federal unemployment tax (FUTA) rate for companies that do not participate in a state
unemployment tax (SUTA) plan?
A)
0.6% on the first $7,000 of each employee‘s wages
B)
6.0% on the first $7,000 of each employee‘s wages
C)
5.4% on the first $7,000 of each employee‘s wages
D)
6.0% on all of the employee’s wages
Answer:
B
A)
B)
C)
D)
9)
9)
Davis–Bacon wage rates may vary based on which of the following?
A)
Type of work
B)
County
C)
State
D)
All of the above
Answer:
D
A)
B)
C)
D)
10)
10)
For a profit–sharing plan, such as a 401(k) plan, the employer may choose to contribute which of
the following?
A)
All contributions
B)
Nothing, leaving all contributions up to the employee
C)
Part of the contributions
D)
All of the above
Answer:
D
A)
B)
C)
D)
ESSAY. Write your answer in the space provided or on a separate sheet of paper.
11)
What does general liability insurance protect the company from?
Answer:
General liability insurance protects the company against claims due to negligent business activities and
failure to use reasonable care. The types of claims include bodily injury, property damage or loss, and
other personal injury such as slander or damage to reputation.
12)
Where would you find the current limits for Social Security taxes?
Answer:
IRS, Circular E, Employer’s Tax Guide, Publication 15.
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13)
What other benefits may be included in labor burden?
Answer:
Other benefits that could be included in labor burden are reimbursement for school or training and
professional society dues for the employee.
14)
How is a vehicle allowance different than a mileage reimbursement?
Answer:
An allowance differs from reimbursing the employees for expenses or mileage because it is not based
on the actual cost or mileage. Reimbursements are not considered part of the labor wages and burden
but are costs that can be billed to the appropriate general overhead budget category. Cash equivalents,
allowances, and personal use of a company vehicle are treated as regular wages for payroll taxes,
unemployment insurance, workers’ compensation insurance, and general liability insurance.
15)
Where can you find more information about the Fair Labor Standards Act (FLSA)?
Answer:
The Department of Labor’s Handy Reference Guide to the Fair Labor Standards Act.
16)
What items are excluded from wages when calculating the labor burden markup?
Answer:
Wages for time off and bonuses are excluded. The burden markup is calculated by taking the total cost
of the employee and dividing it by the wages paid for work performed and subtracting 1. The work
performed equals the wages paid to the employee less the wages paid for time off and bonuses.
17)
For workers’ compensation insurance, what is an experience modifier?
Answer:
The workers’ compensation premium rate may be modified by an experience modifier, which is done
by multiplying the premium rate by the experience modifier. Experience modifiers are calculated by
the National Council on Compensation Insurance (NCCI) and reflect the relationship between the
company’s actual losses and the expected losses for similar companies.
18)
What governs how much an employer pays a trade union?
Answer:
Payments to unions are governed by the contract between the company and the union.
19)
Based on the general decision in Figure 8–1 in the text, how much must a laborer working as a mason tender
laying bricks be paid?
Answer:
$16.38 in wages and $1.00 in fringes.
20)
What may a company provide instead of fringe benefits?
Answer:
In some cases where a company is required to provide fringe benefits, it may be allowed to pay the
cash equivalent of those benefits.
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Answer Key
Testname: C8
1)
C
2)
B
3)
D
4)
B
5)
A
6)
C
7)
A
8)
B
9)
D
10)
D
11)
General liability insurance protects the company against claims due to negligent business activities and failure to use
reasonable care. The types of claims include bodily injury, property damage or loss, and other personal injury such as
slander or damage to reputation.
12)
IRS, Circular E, Employer’s Tax Guide, Publication 15.
13)
Other benefits that could be included in labor burden are reimbursement for school or training and professional
society dues for the employee.
14)
An allowance differs from reimbursing the employees for expenses or mileage because it is not based on the actual
cost or mileage. Reimbursements are not considered part of the labor wages and burden but are costs that can be
billed to the appropriate general overhead budget category. Cash equivalents, allowances, and personal use of a
company vehicle are treated as regular wages for payroll taxes, unemployment insurance, workers’ compensation
insurance, and general liability insurance.
15)
The Department of Labor’s Handy Reference Guide to the Fair Labor Standards Act.
16)
Wages for time off and bonuses are excluded. The burden markup is calculated by taking the total cost of the
employee and dividing it by the wages paid for work performed and subtracting 1. The work performed equals the
wages paid to the employee less the wages paid for time off and bonuses.
17)
The workers’ compensation premium rate may be modified by an experience modifier, which is done by multiplying
the premium rate by the experience modifier. Experience modifiers are calculated by the National Council on
Compensation Insurance (NCCI) and reflect the relationship between the company’s actual losses and the expected
losses for similar companies.
18)
Payments to unions are governed by the contract between the company and the union.
19)
$16.38 in wages and $1.00 in fringes.
20)
In some cases where a company is required to provide fringe benefits, it may be allowed to pay the cash equivalent of
those benefits.
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