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DochEvi [55]
2 years ago
12

An insurance company knows that the average cost to build a home in a new California subdivision is ​$92 comma 297 and that in a

ny particular year there is a 1 in 41 chance of a wildfire destroying all the homes in the subdivision. Based on these data and assuming the insurance company wants a positive expected value when it sells​ policies, what is the minimum the company must charge for fire insurance policies in this​ subdivision?
Business
1 answer:
Marrrta [24]2 years ago
5 0

Answer:

The minimum the company must charge for fire insurance policies in California​ subdivision is $2,252.

Explanation:

We have the chance of a wildfire destroying all the homes in the subdivision is: 1/41 or nearly 2.44%.

The minimum the company must charge for fire insurance and still maintain a positive expected value is calculated as:

The average cost to build a home in the subdivision * the chance of a wildfire destroying all the homes in the subdivision = 92,297 * 2.44% = $2,252.

So, the answer is $2,252.

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_____ contracts involve payment to the supplier for direct and indirect actual costs and often include fees.
mojhsa [17]

Cost-reimbursable contracts involve payment to the supplier for direct and indirect actual costs and often include fees.

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7 0
1 year ago
Camper's Edge Factory produces two products: canopies and tents. The total factory overhead is budgeted at $750,000 for the year
Pavel [41]

Answer:

Camper's Edge Factory

Departments                                  Cutting             Sewing

a. The total number of budgeted

   direct labor hours for the year  60,000            70,000

b. Products                                     Canopy          Tent

   Factory overhead per unit         $17.50            $40

Explanation:

a) Data and Calculations:

Total budgeted factory overhead = $750,000

                                               Canopy        Tent     Total

Direct labor hours  

Cutting                                       2                     1         3

Sewing                                       1                     6         7

Total direct labor hours            3                    7

Budgeted production units 20,000          10,000

Departments                              Cutting                        Sewing

Budgeted factory overhead  $350,000                     $400,000

Direct labor hours:

Canopy                                  40,000 (20,000 * 2)          10,000 (10,000 * 1)

Tent                                       20,000 (20,000 * 1)          60,000 (10,000 * 6)

Total direct labor hours        60,000                              70,000

Overhead allocation rates     $5.833                               $5.714

                         ($350,000/60,000)                              ($400,000/70,000)

Overhead per unit              $17.50 ($5.833 * 3)            $40 ($5.714 * 7)

               

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Answer:

Buyers will bear most of the burden of the tax

Explanation:

Hope it helps

6 0
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