If Mega Corp

question 48

Multiple Choice

If Mega Corp.borrows $9,000 in 2010 and agrees to pay the lender $10,000 in 2011, the interest rate on the loan is approximately:

• A) 9.0 percent.
• B) 10.0 percent.
• C) 11.1 percent.
• D) Not enough information to determine.

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Definitions:

Variable Direct Materials Cost

Refers to the fluctuating cost of raw materials that directly goes into producing a product, changing as the volume of production varies.

Contribution Margin

The amount by which the sale of a product exceeds its variable costs, contributing to covering fixed costs and generating profit.

Activity Rate

The estimated activity cost divided by estimated activity-base usage.

Production Setup

The preparation and arrangement of tools, machines, and equipment necessary for the commencement of production operations in a manufacturing environment.