Calculate the Virginia workers compensation premium for a framing contractor with $350,000 in annual payroll and a rate of $8.75 per $100 of payroll:
Correct Answer
A) $30,625
Premium = ($350,000 ÷ $100) × $8.75 = 3,500 × $8.75 = $30,625
Why This Is the Correct Answer
The workers' compensation premium formula is: (Payroll ÷ 100) × Rate. Here: ($350,000 ÷ 100) × $8.75 = 3,500 × $8.75 = $30,625. This is the standard industry calculation method used by all workers' comp carriers — the rate is always expressed per $100 of payroll.
Why the Other Options Are Wrong
Option B: $35,200
$35,200 results from a calculation error, likely using an incorrect payroll figure or rate. One common mistake is multiplying $350,000 × 0.1006 instead of using the correct per-$100 formula.
Option C: $32,450
$32,450 does not result from the correct formula applied to these numbers. This distractor may tempt candidates who make arithmetic errors or confuse the rate with a different classification.
Option D: $28,875
$28,875 is also incorrect and may result from using a slightly lower rate (e.g., $8.25 per $100) or dividing by a wrong base number. Always use exactly the rate and payroll given in the problem.
Memory Technique
The formula has two steps: DIVIDE then MULTIPLY. '$350,000 ÷ 100 = $3,500 units, then $3,500 × $8.75 = $30,625.' Think of it as buying 3,500 units of coverage at $8.75 each.
More Virginia Questions
Under Virginia law (Title 54.1), what is the minimum net worth requirement for a Class A contractor license?
A Virginia contractor fails to pay a subcontractor $18,500 for completed work. Under Virginia mechanics lien law, within how many days must the subcontractor file a memorandum of lien to preserve their lien rights?
A Virginia contractor employs 8 workers with a total annual payroll of $420,000. Using the standard construction rate of $8.50 per $100 of payroll, what is the annual workers' compensation premium?
A Virginia contractor fails to pay subcontractors on a $180,000 project. Under Virginia mechanics lien law, what is the maximum time period a subcontractor has to file a mechanics lien after last furnishing labor or materials?
Under Virginia contractor law, what happens to a contractor's license if they fail to maintain required insurance coverage?
A contractor fails to pay a subcontractor and the subcontractor files a mechanics lien. Under Virginia law, within how many days must the general contractor post a bond to release the lien from the property?
A Class B contractor in Virginia completed $850,000 worth of work in the current license period and has contracts totaling $1,200,000 for the next period. What action must the contractor take?
A homeowner hired an unlicensed contractor for a $45,000 kitchen renovation. Under Virginia law, what remedy is available to the homeowner?
Calculate the required bond amount for a Virginia Class A contractor with average annual gross receipts of $2,800,000 over the past three years.
A Class C contractor in Virginia wants to install a residential HVAC system valued at $12,000. The contractor's specialty classification is electrical work. What must the contractor do to legally perform this work?
People Also Study
Business & Financial Management
120 questions · 70% to pass
Contract Administration
60 questions · 70% to pass
Project Management
60 questions · 70% to pass
Related Study Resources
Previous Question
A Virginia contractor discovers an underground storage tank during excavation. The tank appears to be leaking petroleum products. What is the required notification timeframe to Virginia DEQ?
Next Question
A Virginia contractor has a workers' compensation policy with a $500,000 limit. An employee suffers a permanent disability requiring $750,000 in benefits. What is the contractor's financial exposure?