Selvage Co employed 120 staff throughout the year ended 31 December. The average annual salary at the start of the year was $30,000, and a 4% pay rise took effect from 1 April. What is the expected total salary cost for the year in a proof in total?

Correct answer: C) $3,708,000

Explanation

Average salary for the year = ($30,000 x 3/12) + ($31,200 x 9/12) = $7,500 + $23,400 = $30,900. Expected total = 120 x $30,900 = $3,708,000. $3,744,000 applies the rise for the full year, $3,636,000 applies it for only three months and $3,600,000 ignores it.