Calculate the workers compensation premium for a NC framing contractor with $180,000 in payroll and a rate of $8.50 per $100 of payroll:
Correct Answer
B) $15,300
Premium = ($180,000 ÷ $100) × $8.50 = 1,800 × $8.50 = $15,300
Why This Is the Correct Answer
Option B ($15,300) is correct. Workers comp premiums are calculated by dividing total payroll by $100, then multiplying by the rate: ($180,000 ÷ $100) × $8.50 = 1,800 × $8.50 = $15,300.
Why the Other Options Are Wrong
Option A: $12,800
$12,800 results from using an incorrect divisor or rate — no standard arithmetic path from $180,000 at $8.50/$100 produces this figure. It may reflect a miscalculation using $80,000 as the payroll base.
Option C: $21,400
$21,400 is too high and would result from applying roughly a $11.89/$100 rate — likely from confusing payroll units or applying a different trade's higher rate.
Option D: $18,900
$18,900 results from incorrectly using a rate of $10.50 per $100, or from misreading the payroll figure. It's a plausible distractor for those who misremember the rate.
Memory Technique
Think of it as 'cents per dollar of payroll per hundred': the rate is per $100, so shrink the payroll first. Payroll ÷ 100 = units; units × rate = premium. '$180K payroll → 1,800 units → × $8.50 → $15,300.'
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