Page 307 - Fire Insurance Ebook IC 57

The Insurance Times

So, a trend whether upward or downward must have to
be taken into account when arriving at the rate of gross
profit.

The annual turnover also require adjustment, so that
while calculating the insurable amount on gross profit
for average purpose, the correct figure will be produced.
The standard turnover also has to be similarly adjusted.

Q4. Write notes on the following as related to

consequential loss:

Ans: (a) Turnover- concept, elements and examples -
The turnover constitutes the following three elements:
(i) Variable charges - These are expenses incurred
in producing the goods which vary in direct
proportion to the volume of business transacted.

(ii) Standing Charges - These are the fixed

expenses in amount irrespective of the volume

of business transacted or which cannot be

reduced in direct proportion to any reduction of

business. E.g, Taxes, Bank Interest, Salaries to

permanent staffs, etc. 320

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