Trayne Corporation's sales office and manufacturing plant are located in State X.Trayne also maintains a manufacturing plant and sales office in State W.For purposes of apportionment, X defines payroll as all compensation paid to employees, including elective contributions to § 401(k) deferred compensation plans.Under the statutes of W, neither compensation paid to officers nor contributions to § 401(k) plans are included in the payroll factor.Trayne incurred the following personnel costs. Trayne's payroll factor for State X is:

Question

Trayne Corporation's sales office and manufacturing plant are located in State X.Trayne also maintains a manufacturing plant and sales office in State W.For purposes of apportionment, X defines payroll as all compensation paid to employees, including elective contributions to § 401(k) deferred compensation plans.Under the statutes of W, neither compensation paid to officers nor contributions to § 401(k) plans are included in the payroll factor.Trayne incurred the following personnel costs.  Trayne's payroll factor for State X is:

Quizplus · Accepted Answer

The payroll factor for State X includes all compensation paid to employees, including elective contributions to § 401(k) deferred compensation plans, so the total payroll factor is $50,000 + $30,000 + $20,000 = $100,000. However, in State W, contributions to § 401(k) plans are not included in the payroll factor, so only the salaries paid to employees ($50,000 + $30,000) are considered. Thus, the payroll factor in State W is $80,000. To calculate the overall payroll factor for Trayne, we add the payroll factors for each state and divide by the total personnel costs: ($100,000 + $80,000) / $225,000 = 0.6667 or 66.67%. Therefore, the best choice is B.

Trayne Corporation's Sales Office and Manufacturing Plant Are Located in State