Chapter 1 Discusses Ten Principles That Form the Foundation of Personal

question 59

Multiple Choice

Chapter 1 discusses ten principles that form the foundation of personal finance. The principle that considers the importance of insurance is the ________ principle.

• A) agency problem - beware the sales pitch
• B) all risk is not equal
• C) time value of money
• D) protect yourself against major catastrophes
• E) none of the above

---

Definitions:

Predetermined Overhead Rate

A rate calculated at the beginning of the period, used to allocate overhead costs to products based on a specific activity base.

Machine Hours

Machine hours represent the total amount of time that machines are operating in a manufacturing or production process.

Direct Labour Hours

The total hours worked by employees directly involved in the production process, used to allocate labor costs to products or services.

Predetermined Overhead Rates

Rates used in costing that are established in advance to allocate overhead costs based on estimated expenditures.