a. Complete the product profitability report through the administrative activities. Determine the operating income as a percent of premium revenue. Rounded to the nearest whole percent. Description Premium revenue Estimated claims Underwriting income Administrative activities: New policy processing Cancellation processing Claim audits Claim disbursements processing Premium collection processing Total administrative expenses Operating income Five-Stars Insurance Company Product Profitability Report For the Year Ended December 31 Auto Workers' Comp. Homeowners B Operating income as a percent of premium revenue b. Interpret the report. % % % All three insurance lines have consume activities. The percentage of underwriting income to premium revenue. The differences among the insurance lines are in the way insurance line has the profitability because it has a frequent claims that require more auditing and disbursement processing than do the other two lines. In addition, the Homeowners line has a muc higher rate of cancellation relative to the other two lines (over 50% of new policies). Lastly, the Homeowners line has more premium collections compared to the other t lines. Possibly, the Homeowners line is collected in smaller amounts from more customers than the other two lines. In contrast, the administrative activities, causing it to be very profitable. The Auto line is in between these two. line consume
a. Complete the product profitability report through the administrative activities. Determine the operating income as a percent of premium revenue. Rounded to the nearest whole percent. Description Premium revenue Estimated claims Underwriting income Administrative activities: New policy processing Cancellation processing Claim audits Claim disbursements processing Premium collection processing Total administrative expenses Operating income Five-Stars Insurance Company Product Profitability Report For the Year Ended December 31 Auto Workers' Comp. Homeowners B Operating income as a percent of premium revenue b. Interpret the report. % % % All three insurance lines have consume activities. The percentage of underwriting income to premium revenue. The differences among the insurance lines are in the way insurance line has the profitability because it has a frequent claims that require more auditing and disbursement processing than do the other two lines. In addition, the Homeowners line has a muc higher rate of cancellation relative to the other two lines (over 50% of new policies). Lastly, the Homeowners line has more premium collections compared to the other t lines. Possibly, the Homeowners line is collected in smaller amounts from more customers than the other two lines. In contrast, the administrative activities, causing it to be very profitable. The Auto line is in between these two. line consume
Financial & Managerial Accounting
14th Edition
ISBN:9781337119207
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter18: Activity-Based Costing
Section: Chapter Questions
Problem 18.21EX: Activity-based costing for a service company Safely First Insurance Company tarries three major...
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