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BURNS, FIGA & WILL, P.C. <br /> Cheryl Linden <br /> June 9, 1995 <br /> Page 7 <br /> Section 1.6 documents insurance charges to MCR based on the costs for benefits of employees <br /> engaged in work for MCR, also apportioned according to the time spent working for MCR. <br /> Employee benefits include health insurance and a life insurance plan which provides a <br /> benefit of $50,000 for salaried employees ($40,0000 for hourly employees). Central Benefits <br /> provides health insurance and part of the life insurance coverage, with the remaining life <br /> insurance benefit provided by Standard Insurance. Lew Thompson was covered for medical <br /> insurance on his wife's plan with another company through November 1993. The monthly <br /> charge of $18.65 for September through November, 1993 is the cost of his life insurance <br /> coverage through the Standard Life Insurance Company. See Exhibit B. As of December 1, <br /> 1993, Mrs. Thompson's employment status changed, with the result that Lew Thompson did <br /> require coverage through Central Benefits. The billing for the period March 1, 1994 through <br /> April 1, 1994, from Central Benefits includes $1,373.43 for coverage of Lew Thompson since <br /> December 1, 1993. It has been copied from the document provided previously, and is included <br /> as Exhibit B. <br /> 3. The documents indicate that the employees listed were paid by the hour. However, the <br /> documents also show that the hourly rate as applied to the same employee varies. Please <br /> explain this situation. In addition, given that these people did not exclusively work for <br /> MCR, it is unfair to have the estate pay for any vacation time requested by Lew <br /> Thompson and Jim Fortune. Please explain why Pitkin Iron seeks payment for vacation <br /> time for these two individuals. <br /> Response: The employees were salaried, except Jim Fortune and the laborers. The allocation <br /> of time between MCR and Pitkin Iron was recorded and calculated on an hourly basis. The <br /> rates are different because the employees worked more hours per month in some months than <br /> other months. In the case of a salaried employee, the imputed hourly rate would vary according <br /> to the number of hours worked within a pay period. <br /> As indicated in Section 1.4, Employee Payroll, the billing to MCR for a salaried <br /> employee is computed by the employees' gross pay, divided by the number of hours worked (so <br /> as to impute an hourly rate for billing purposes) and apportioned monthly according to the <br /> percent of total hours worked for MCR. <br /> For example, note the Summary of Employee Changes. John Farnum worked 150 hours <br /> in September and November, and 132 hours in October. Because he was salaried, his gross pay <br /> ($2,600) did not vary, but if divided by the actual time spent working, his imputed hourly rate <br /> was variable (from $16.25 per hour during September and November, to $19.69 per hour in <br /> October). Please note that a record of hours worked, activity, and whether for MCR or Pitkin <br /> Iron, is provided for each month. <br />