The New Manager of the Insurance Division Does Not Understand

question 88

Essay

The new manager of the insurance division does not understand how the company can have so many overhead rates for assigning costs to the activities of the company's life insurance underwriters.There is one rate schedule for average assignable costs when agents write standard policies.There is another rate schedule which the agents must complete when they write special policies, and these policies are costed out differently from those that are categorized as standard policies.Required:
Why might the company have different costing systems with different overhead rates for the standard and specialized policies?

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Definitions:

Retailing Mix

The activities related to managing the store and the merchandise in the store, which include retail pricing, store location, retail communication, and merchandise.

Full-Service

Businesses or service providers that offer a comprehensive range of solutions and support, covering all the needs in a specific area without requiring the client to go elsewhere.

Personal Shopping Services

Services offered by individuals or companies to help customers make purchases based on the customers' needs, preferences, and budget.

Limited-Line Stores

Retail outlets that offer a limited variety of products but within a specific product category or segment.