Smith Owned a Concrete Block Building Valued at $200,000

question 86

True/False

Smith owned a concrete block building valued at $200,000.Because it was virtually fireproof,he insured it for only $100,000 under a policy of insurance,which contained an 80 percent co-insurance clause.Some time later,the building was damaged by fire.
-If the fire damage was $80,000,the insurer would be obliged to pay only $5,000 of the claim.

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Definitions:

Residual Income

The income that remains after subtracting all required expenses, including a minimum target return, from operating income.

Producing Departments

Sections within a manufacturing facility where raw materials are processed or assembled into finished products.

Fixed Costs

Costs that do not change with the level of output or sales, such as rent, salaries, and insurance premiums.

Cafeteria

A type of food service location within an establishment where customers serve themselves from a variety of options.