One Reason for the Recent Decline in the Expense Ratio

question 22

True/False

One reason for the recent decline in the expense ratio for PC insurers is an increase dependence on independent brokers to sell and distribute insurance policies.

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Definitions:

Direct Materials

Raw materials that can be directly traced to the production of finished goods.

Fixed Costs

Expenses that do not change in total despite fluctuations in production levels or sales volume.

Income Statement

A financial statement that shows a company's revenues, expenses, and profitability over a specified period of time, providing insight into its financial performance.

Absorption Costing

An accounting method where all manufacturing costs, including both fixed and variable costs, are allocated to produced units.