An Oregon contractor has 3 employees with total quarterly wages of $42,000. The workers compensation rate is 6.8%. What is the quarterly premium?
Correct Answer
D) $2,856
Quarterly workers compensation premium = $42,000 × 0.068 = $2,856.
Why This Is the Correct Answer
Option D is correct. The quarterly premium is calculated as: Total Wages × Rate = $42,000 × 0.068 = $2,856. The number of employees (3) is irrelevant — only total wages and the percentage rate are needed.
Why the Other Options Are Wrong
Option A: $2,448
$2,448 results from using a rate of approximately 5.83% instead of 6.8%, or from incorrectly dividing the payroll before multiplying. It does not match the correct formula.
Option B: $3,672
$3,672 results from using a higher rate of approximately 8.74%, which is incorrect. This could stem from confusing 6.8% with a different rate or misplacing a decimal.
Option C: $3,264
$3,264 results from applying approximately 7.77% to the payroll, again reflecting a rate error or arithmetic mistake.
Memory Technique
For percentage-format rates, multiply total payroll × rate directly. For per-$100 rates, divide payroll by 100 first then multiply. Either way, ignore the employee headcount — it does not factor into the premium formula.
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