You Have Cash Value Coverage for Your Personal Property on Your

question 18

Multiple Choice

You have cash value coverage for your personal property on your homeowner's policy. A camera that cost you $300 eight years ago had a life expectancy of 10 years. The camera was stolen, and a new one will cost only $200. How much will the insurance company pay?

• A) $60
• B) $100
• C) $200
• D) $300

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Definitions:

Weighted-Average Method

A cost accounting method that calculates the cost of equivalent units of production by considering the weight of the cost of current and prior periods' goods.

Equivalent Units

A concept used in cost accounting to express the amount of work done by manufacturers in terms of fully completed units.

Materials

Items or supplies used in the production of goods, considered part of the direct costs in manufacturing.

FIFO Method

"First In, First Out," an inventory valuation method that assumes goods are sold in the order they are acquired, impacting the cost of goods sold and inventory value.