A Strip-Mall Includes Eight Identical-Sized Retail Units

question 13

Multiple Choice

A strip-mall includes eight identical-sized retail units.All of the units were built at the same time and each has an identical sprinkler system.Unit number two is a dry cleaning business.Unit number three is a bar and grill.Unit number four is a dress shop.The owners of these three units are all insured by the same insurance company,but the property insurance premiums vary significantly.Which of the following rating factors best explains the difference in premiums?

• A)exposure
• B)protection
• C)construction
• D)occupancy

---

Definitions:

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the standard quantity expected, multiplied by the standard cost per unit.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and constitute a significant portion of the product’s cost.

Direct Labour

The wages of workers or employees who are directly involved in the production of goods or the delivery of services.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead incurred and the expected (standard) variable overhead based on the efficient usage of manufacturing resources.