All of the Following Statements About the Independent Agency System

question 1

Multiple Choice

All of the following statements about the independent agency system are true EXCEPT

• A)Agents are often authorized to adjust small claims.
• B)Agents are compensated on the basis of commissions.
• C)The insurer rather than the agent owns the renewal rights to the business.
• D)The agent is an independent business person who represents several insurers.

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Definitions:

Direct Labor

The term refers to the employees and labor cost directly associated with the manufacturing of goods, which includes workers who use the raw materials to build the product.

Process Costing

An accounting methodology used in manufacturing to allocate costs of production to individual units, suitable for homogenous products.

Conversion Cost

The combined cost of direct labor and manufacturing overheads incurred to convert raw materials into finished products.

Work In Process

Inventory that includes goods that are in the production process but not yet completed.