A subcontractor's workers compensation policy costs $18,000 annually for a payroll of $400,000. If the payroll increases to $520,000, what will be the new annual premium cost?
Correct Answer
B) $23,400
Rate = $18,000 ÷ ($400,000 ÷ $100) = $18,000 ÷ 4,000 = $4.50 per $100. New premium = ($520,000 ÷ $100) × $4.50 = 5,200 × $4.50 = $23,400
Why This Is the Correct Answer
Rate = $18,000 ÷ ($400,000 ÷ $100) = $18,000 ÷ 4,000 = $4.50 per $100. New premium = ($520,000 ÷ $100) × $4.50 = 5,200 × $4.50 = $23,400
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