In: Accounting
Mr. Nixon and Mr. Ryan are employed by HD Inc., which provides
its employees with free parking. If the parking were not available,
Mr. Nixon would pay $15 a month to a city garage. Mr. Ryan uses
public transportation to commute. HD offers a complete family
medical plan to its employees in which both Mr. Nixon and Mr. Ryan
participate. Mr. Nixon’s family consists of five people, while Mr.
Ryan is single. Consequently, Mr. Nixon’s annual cost of comparable
medical insurance would be $15,700, and Mr. Ryan’s cost would be
just $8,250. Assume that Mr. Nixon and Mr. Ryan cannot deduct their
annual medical insurance premiums.