Which of the Following Statements Is Correct with Respect to Bonding

question 36

Multiple Choice

Which of the following statements is correct with respect to bonding?

• A) Bonding is another term for insurance. The two terms, bonding and insurance, are interchangeable.
• B) If a person is bonded and that person commits some wrongful act such as stealing a client's money, the bonding company is bound to compensate him for any losses he suffers from being caught.
• C) Bonding provides protection to the victim injured by the wrongful conduct of the person bonded.
• D) Bonding is a government certification system whereby the government guarantees that a person so bonded or certified will do the job he is hired to do as set out in the bonding certificate.
• E) Bonding provides protection against losses incurred because of fluctuations in the financial markets.

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Definitions:

Direct Labor-Hours

The total amount of labor time directly involved in manufacturing a product or delivering a service, often used as a basis for allocating overhead costs.

Variable Manufacturing Overhead

Overhead costs that fluctuate directly with the volume of production output, such as utilities and indirect materials.

Raw Materials

The basic, unprocessed inputs used in manufacturing to produce goods and finished products.

Price Variance

The difference between the actual cost and the standard or expected cost of an item or service.