Question

please show all work

3. Zegla manufacturing company is thinking of hiring a safety engineer to prevent the rise in worker's compensation in the company. The safety engineer salary is proposed to be $130,000/year. The management has agreed to hire the engineer if only the third- year worker's compensation insurance premium will not exceed $3,000 more of the proposed salary. If the payroll for the year is $5,657,963 with employee manual rate of S2.91/S100 of payroll, If the experience multiplier for year 2-1.86 and year 3-0.78 Will this hire be approved once the premium for the third year is calculated and compared? (Provide detailed calculations)

Answer 1

Premiums for workers' compensation insurance are calculated by the formula below:

Payroll (per $100)    X     Classification Rate     X     Experience Modifier     =     Premium

5,657,963/100*2.91*0.78= $128,424

The hire will be approved as the workers' compensation insurance premium will not exceed $3000 more of the proposed salary.