An Automobile Insurance Company Is in the Process of Reviewing

question 176

Multiple Choice

An automobile insurance company is in the process of reviewing its policies. Currently drivers under the age of 25 have to pay a certain premium. The company is considering increasing the value of the premium charged to drivers under 25. According to company records, 35% of the insured drivers are under the age of 25. The company records also show that 280 of the 700 insured drivers under the age of 25 had been involved in at least one automobile accident. On the other hand, only 130 of the 1300 insured drivers 25 years or older had been involved in at least one automobile accident.
-An accident has just been reported.What is the probability that the insured driver is under the age of 25?

• A)0.35
• B)0.205
• C)0.14
• D)0.683
• E)0.4

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Definitions:

Direct Materials

Basic substances that can be directly linked to the production of a particular item.

Standard Costing

Standard Costing is an accounting method that utilizes standard costs for materials, labor, and overhead for the purpose of controlling costs and identifying variances.

Variable Overhead

Costs that fluctuate in total with changes in activity level, such as the cost of utilities or indirect materials, associated with production or services.

Labour Rate Variance

A financial metric that measures the difference between the actual cost of labor and its expected cost based on standard rates.