What Is the Purpose of the Requirement of an Insurable

question 48

Multiple Choice

What is the purpose of the requirement of an insurable interest?

• A) to ensure that property may only be insured by its owner
• B) to discourage an insured from intentionally destroying property in order to make an insurance claim
• C) to prevent insureds from underinsuring their property
• D) to permit the insurer to recover from the wrongdoer

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Definitions:

Unit Product Cost

The cost assigned to a single unit of product, combining direct materials, direct labor, and manufacturing overhead expenses.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate manufacturing overhead costs to individual products based on a common activity base.

Markup

The amount added to the cost price of goods to cover overhead and profit.

Manufacturing Cost

The total expense incurred in the process of producing goods, including materials, labor, and overhead.