A St. Cloud insurance audit estimates a 0.82% charge on $640,000 of auditable exposure. What audit premium should be accrued?
Correct Answer
C) $5,248.00
Audit premium is the audited exposure multiplied by the stated rate.
Why This Is the Correct Answer
Audit premium is the audited exposure multiplied by the stated rate.
Why the Other Options Are Wrong
Option A: $524.80
$524.80 is below the supported result for insurance audit premium; it likely skips a premium-pay or employer-cost component.
Option B: $645,248.00
$645,248.00 is above the supported result for insurance audit premium; it likely pays the wrong premium tier or counts the same hours twice.
Option D: $2,624.00
$2,624.00 is below the supported result for insurance audit premium; it likely skips a premium-pay or employer-cost component.
Memory Technique
Who controlled audited, who paid exposure, where is the Controller Reviews record?
Reference Hint
Open-book path: tab Contractor's Manual, 2025 to Business Administration, Insurance Audit Administration; use the stated business record or control rule to verify the answer.
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