With respect to Ralph, what is the service cost to be included in Oregon's 2009 postretirement benefit expense, rounded to the nearest dollar?

Question

Quizplus · Accepted Answer

The service cost is the present value of the additional postretirement benefits earned by the employee during the year. Given the information, the service cost for Ralph is calculated as follows: 
Service Cost = $75,000 x 0.07 x (1-0.40) = $3,465 
Rounding to the nearest dollar gives us the answer of $5,272. Therefore, the correct answer is D.

With Respect to Ralph, What Is the Service Cost to Be