A Georgia contractor has 8 employees with a total annual payroll of $320,000. The workers compensation rate is $4.50 per $100 of payroll. What is the annual workers compensation premium?
Correct Answer
C) $14,400
Premium = ($320,000 ÷ $100) × $4.50 = 3,200 × $4.50 = $14,400
Why This Is the Correct Answer
The formula is: (Total Payroll ÷ $100) × Rate. ($320,000 ÷ $100) = 3,200 units. 3,200 × $4.50 = $14,400. This is the standard workers' compensation premium calculation used in Georgia and most states.
Why the Other Options Are Wrong
Option A: $16,200
$16,200 would result from multiplying 3,600 × $4.50 or using an incorrect payroll figure, not from the given $320,000 payroll.
Option B: $12,800
$12,800 appears to be the result of multiplying the number of employees (8) by $1,600 — a nonsensical approach that does not follow the per-$100-payroll formula.
Option D: $18,000
$18,000 would require a payroll of $400,000 at the $4.50 rate, or a higher rate applied to the given payroll. Neither matches the problem's data.
Memory Technique
The formula is: Payroll ÷ 100, then × Rate. Picture a $100 bill: you count how many $100 bills are in the payroll, then pay the rate for each one. $320,000 ÷ 100 = 3,200 bills × $4.50 each = $14,400.
More Georgia Questions
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Which situation would require a Georgia contractor to obtain workers' compensation insurance?
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A contractor's license expires on June 30th. They submit a renewal application on July 15th. What additional requirement must they meet?
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A contractor's annual payroll is $450,000. If the workers compensation rate is 8.5 per $100 of payroll, what is the annual premium?
What is the threshold amount above which a contractor must be licensed in Georgia?
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