Maximum reimbursement for the employee


Problem:

Your company has a travel policy that reimburses employees for the "ordinary and necessary" costs of business travel. Employees often mix a business trip with pleasure by either extending the time at the destination or traveling from the business destination to a nearby resort or other personal destination. When this happens, an allocation must be made between the business and personal portions of the trip.

However, the travel policy is unclear on the allocation method to follow.

Consider this example. An employee obtained a business-class ticket for $9,590 and traveled the following itinerary:

                                                                    One-Way

From                       To                 Miles          Regular fare      Purpose

Chicago                  Paris              4,080          $3,690            Business

Paris                   Rio de Janeiro     5,760            4,310            Personal

Rio de Janeiro        Chicago           5,340            3,150             Return


A restricted round-trip fare of $4,880 was available on these dates.

Required:

Compute the business portion of the airfare according to each of the following independent scenarios (Omit the "$" sign in your response):

(a) Based on the maximum reimbursement for the employee.

(b) Based on the minimum cost to the company.

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HR Management: Maximum reimbursement for the employee
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