Mark Has Been an Underwriter for 20 Years

question 17

Multiple Choice

Mark has been an underwriter for 20 years. An application he recently reviewed looked odd to him. The building value in the application seemed far too high, and Mark suspected the applicant might be planning to destroy the property after it is insured. Mark hired an outside firm to investigate the applicant and to prepare a report about the applicant. This report is called a(n)

• A) agent's report.
• B) binder.
• C) physical inspection.
• D) inspection report.

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Definitions:

Allocation Methods

Allocation methods are accounting strategies used to distribute costs or revenues among different departments, products, or processes within a company.

Overhead Costs

Indirect expenses related to the operation of a business that are not directly assignable to a specific product or service.

Direct Labor Hours

The total hours worked by employees directly involved in the manufacturing of a product or the provision of a service.

Machine Hours

A measure of production time used in cost accounting to allocate costs to products or job orders, based on the hours a machine is operated.