Wellman Company self insures its property for fire and storm damage. If the company were to obtain insurance on the property, it would cost them $1,000,000 per year. The company estimates that on average it will incur losses of $800,000 per year. During 2008, $350,000 worth of losses were sustained. How much total expense and/or loss should be recognized by Wellman Company for 2008?
A) $350,000 in losses and no insurance expense
B) $350,000 in losses and $450,000 in insurance expense
C) $0 in losses and $800,000 in insurance expense
D) $0 in losses and $1,000,000 in insurance expense
Correct Answer:
Verified
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