Calculate the Tennessee workers' compensation premium for a roofing contractor with a $180,000 annual payroll and a rate of $28.50 per $100 of payroll:
Correct Answer
B) $51,300
Premium = ($180,000 ÷ $100) × $28.50 = 1,800 × $28.50 = $51,300
Why This Is the Correct Answer
Option B is correct because workers' compensation premiums are calculated by dividing the annual payroll by $100, then multiplying by the rate per $100. The calculation is: ($180,000 ÷ $100) × $28.50 = 1,800 × $28.50 = $51,300. This follows the standard workers' compensation premium calculation formula used in Tennessee and most other states.
Why the Other Options Are Wrong
Option A: $63,158
$6,316 is incorrect and appears to result from an error in the calculation process, possibly from incorrectly applying the rate or making arithmetic mistakes when multiplying the payroll units by the premium rate.
Option C: $5,130
$5,130 is incorrect because it appears to be the result of dividing the correct answer by 10, possibly from a decimal placement error or miscalculating the payroll units when applying the rate per $100 of payroll.
Memory Technique
Remember 'Payroll Per Hundred' - PPH: Always divide annual Payroll by 100, then multiply by the Per $100 rate to get the premium in Hundreds (or thousands).
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