Refer to the Data Provided in Table 17 -Refer to Table 17

question 51

Multiple Choice

Refer to the data provided in Table 17.4 below to answer the following question(s) . The table shows the relationship between income and utility for Celeste.
Table 17.4
$$\begin{array} { | c | c | } \hline { \text { Income } } & \text { Total Utility } \\\hline \$ 0 & 0 \\\hline \$ 40,000 & 50 \\\hline \$ 80,000 & 90 \\\hline \$ 120,000 & 120 \\\hline \$ 160,000 & 140 \\\hline\end{array}$$
-Refer to Table 17.4. Suppose Celeste has a 1/3 chance of becoming disabled in any given year. If she does become disabled, she will earn $0. If Celeste does not become disabled, she will earn her usual salary of $120,000. Celeste has the opportunity to purchase disability insurance which will pay her her full salary in the event she becomes disabled. On average, such a contract would cost the insurance company ________ per insured person.

• A) $40,000
• B) $60,000
• C) $80,000
• D) $120,000

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Definitions:

Direct Labor-Hours

The total hours worked by employees directly involved in the production of goods.

Manufacturing Overhead

The indirect factory-related costs that are incurred when a product is manufactured, including costs such as maintenance, utilities, and equipment depreciation.

Predetermined Overhead Rate

An estimated rate used to assign overhead costs to products or job orders, based on a selected activity base.

Direct Labor-Hours

The total number of labor hours spent on producing a single unit of a product or service.