At Christmas time, companies often give employees a small Christmas bonus. If the bonus was in the form of food, and the cost did not exceed $25, the bonus is not taxable. Any type of cash payment is taxable. Assume that we want to make sure that we allow for the FICA tax and that Federal Withholding is not going to be affected. The Employee portion of FICA tax is 7.65 percent. If you gave an employee $400, you would have to take out .0765 * $400 out of the bonus. Suppose that the owner would like to give out $100 bills at the Christmas party. What does the Gross Bonus have to be so that after the FICA tax is removed, it leaves a net amount of $400

Activity-based costing (abc) is not truly a cost collection mechanism as much as it is an inventory valuation method. the main purpose for implementing an activity-based cost system is to try to overcome some of the cost distortions that occur in traditional costing from product differences when there are variations in size and complexity. however, one of the disadvantages of utilizing abc is that the additional information gathering necessary to implement costing with that level of detail might be beyond the reach of some companies with resource or financial constraints. with this in mind, what kinds of industries or companies do you think would benefit most from using activity-based costing and why? in designing or modifying an accounting system to capture appropriate costs for abc, what considerations do you think would need to be made?