Three Cost Drivers Are Used to Estimate the Cost of Processing

Multiple Choice

Three cost drivers are used to estimate the cost of processing insurance claims.The cost drivers are: (1) claim amount,(2) age of vehicle in accident and (3) age of driver in accident.The percentages attributable to the cost drivers are 50% for claim amount,and 15% for each of the other two cost drivers.What is the cost to process Claim #101? The claim amount is $1,000.The age of the vehicle is 5 years.The age of the driver is 20 years.

A) $3.00
B) $3.75
C) $500
D) $503.75