One Hundred Policyholders File Claims with CareFree Insurance

question 11

Multiple Choice

One hundred policyholders file claims with CareFree Insurance.Ten of these claims are fraudulent.Claims manager Earl Evans randomly selects four of the ten claims for thorough investigation.If x represents the number of fraudulent claims in Earl's sample, x has a ___.

• A)normal distribution
• B)hypergeometric distribution, but may be approximated by a binomial
• C)binomial distribution, but may be approximated by a normal
• D)binomial distribution, but may be approximated by a Poisson
• E)exponential distribution

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Definitions:

Direct Material

Materials that can be directly associated with the production of goods, directly entering into and being a significant component of the finished product.

Kilos

A metric unit of mass or weight equal to one thousand grams.

Labor Efficiency Variance

The difference between the actual hours worked and the standard hours worked, multiplied by the standard labor rate.

Direct Labor-Hours

The total amount of labor time directly involved in manufacturing a product or delivering a service, often used as a basis for allocating overhead costs.