Hart Corporation Has an Unfunded Postretirement Health Care Benefit Plan

question 148

Essay

Hart Corporation has an unfunded postretirement health care benefit plan. Life insurance and medical care benefits are provided to employees who render 12 years of service and attain age 55 while in service to the company. At the end of 2018, John Sousa is 35. He was hired by Hart five years ago at age 30 and is expected to retire at the age of 62. The expected postretirement benefit obligation for John is $50,000 at the end of 2018.
Required:
Calculate the accumulated postretirement benefit obligation at the end of 2018 and the service cost for 2018 pertaining to John.

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Definitions:

Degrees Of Freedom

Degrees of freedom in statistics represent the number of independent values or quantities that can vary in an analysis without violating any constraints, often influencing the calculation of statistical parameters.

T-Distribution

A probability distribution that arises in the sampling distribution of sample means, especially useful when the sample size is small and the population variance is unknown.

Population Mean

The average value of all members of a defined set of people, objects, events, or values of interest.

T Distribution Table

A table used in statistics that shows the critical values of the t-distribution, aiding in hypothesis testing and confidence interval estimation.