A Michigan contractor has a $150,000 project with materials costing $45,000, labor at $60,000, and overhead/profit of $45,000. If the workers' compensation rate is 8.5% of labor costs, what is the total workers' comp premium?
Correct Answer
C) $5,100
Workers' compensation is calculated on labor costs only: $60,000 × 8.5% = $5,100. Materials and overhead/profit are not subject to workers' comp premiums.
Why This Is the Correct Answer
Workers' compensation is calculated on labor costs only: $60,000 × 8.5% = $5,100. Materials and overhead/profit are not subject to workers' comp premiums.
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