Insurance Claim

Thread Starter

Oh! I wasn't aware of that. Thank you Is there any reference for this note anywhere? How do we determine whether it's a fixed charge

ruchi lahoti

According to the given information standing charges include administrative expenses (80,000) and finance charges (1,00,000). Insured standing charges being 50,000, uninsured standing charges would be 1,30,000 (1,80,000 - 50,000).

Thread Starter

But ma'am in question no such thing is mentioned so how do we ascertain that?

Kishore Anil

You'll have to figure it out on your own in this question since the detail isn't given out specifically. Total charges in P/L - Standing Insured Charges will give the balance as Standing Uninsured Charges.

Thread Starter

Total Charges in P&L = 80000+20000+100000= 2lacs (-) Standing ins charges = 50000 (given) =1.5lacs â? 1.2lacs So when information is not available how do we know that we have to take only 180000 and not 2lacs?

Kishore Anil

We do not take selling expenses since its not a fixed charge.

Kishore Anil

Fixed charges are those charges that incur no matter what the turnover is. These charges are what the company takes insurance for incase for a loss of profit. Selling expenses on the other hand varies based on turnover and aren't considered as a fixed expense.