Calculate the required surety bond amount for a Virginia Class A contractor with an average annual gross receipts of $2,500,000 over the past three years:
Correct Answer
A) $125,000
Virginia requires Class A contractors with gross receipts over $2,000,000 to maintain a surety bond of $125,000.
Why This Is the Correct Answer
The Virginia Board for Contractors uses a tiered surety bond schedule based on average annual gross receipts. Contractors with gross receipts exceeding $2,000,000 are required to maintain a $125,000 surety bond. With $2,500,000 in average annual gross receipts, this contractor falls into that highest tier, making $125,000 the correct bond amount.
Why the Other Options Are Wrong
Option B: $50,000
$50,000 corresponds to a lower gross receipts tier for Class A contractors (typically the entry-level tier). A contractor generating $2,500,000 annually has long outgrown that tier and must carry the higher bond amount.
Option C: $75,000
$75,000 is the bond amount for a middle tier (typically $500,001–$2,000,000 in gross receipts). At $2,500,000, the contractor has exceeded this tier and must move to the $125,000 bond.
Option D: $250,000
$250,000 overstates the requirement. No current Virginia Class A bond tier reaches $250,000; the maximum required bond is $125,000 for the highest gross receipts tier.
Memory Technique
Think of a staircase: Step 1 (lowest receipts) = $50K bond. Step 2 (middle) = $75K bond. Step 3 (top, over $2M) = $125K bond. $2.5M is on the top step — $125K.
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