List some factors that can be used to allocated expenses.

• A. Policy type
• B. Premium, claim count or headcount
• C. Market share
• D. Geographic region

Answer: (B)

Expense allocation uses cost drivers—factors that reflect how much resource is used. Bases like premium, claim count, or headcount tie directly to the activity level and workload involved in servicing policies or processing claims, so allocating expenses by these measures gives a fair reflection of resource usage. Using policy type, market share, or geographic region doesn’t directly measure how much cost is consumed: policy type is a classification, market share is a market metric, and geographic region is a location-based grouping that may align with differences in cost but doesn’t capture the actual activity level driving expenses. So, premium, claim count, or headcount are the most appropriate bases for allocating expenses.