Workers' compensation is rated at $5.85 per $100 of covered payroll. If covered payroll is $96,000, what premium should be accrued?
Correct Answer
C) $5,616
There are 960 units of $100 payroll at $5.85 each.
Why This Is the Correct Answer
There are 960 units of $100 payroll at $5.85 each.
Why the Other Options Are Wrong
Option A: $4,680
$4,680 is below the supported result for workers' compensation accrual; it likely skips a premium-pay or employer-cost component.
Option B: $5,280
$5,280 is below the supported result for workers' compensation accrual; it likely skips a premium-pay or employer-cost component.
Option D: $5,850
$5,850 is above the supported result for workers' compensation accrual; it likely pays the wrong premium tier or counts the same hours twice.
Memory Technique
Workers' ladder for Job-Cost Report: hours climb before dollars add up.
Reference Hint
Open-book path: tab Builder's Guide to Accounting, 2001 to Section Two, Payroll Accounting, Accounting for Tax Liabilities; use the job ledger figures in the stem and recompute the same accounting measure.
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