The Insurance Carrier Used by Best Security Systems Specifies 75

question 88

Multiple Choice

The insurance carrier used by Best Security Systems specifies 75% coinsurance. The company recently incurred $696,000 in damages from a tornado. The building was valued at $877,000, but was only insured for $606,000. What amount will be paid by the insurance company for the loss? (Round your answer to the nearest cent)

• A) $696,000.00
• B) $641,240.59
• C) $578,495.07
• D) $592,750.00

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Definitions:

Standard Costs

A measurement of the expected cost of producing or acquiring goods under normal conditions.

Financial Expertise

Specialized knowledge and skills in finance, enabling an individual to make informed money management decisions.

Production Area

Part of a business where goods are manufactured or assembled.

Controllable Variance

The difference between the actual amount of variable factory overhead cost incurred and the amount of variable factory overhead budgeted for the standard product.