Margin Requirements Require Investors in Futures Contracts to Make Deposits

question 139

True/False

Margin requirements require investors in futures contracts to make deposits with their respective brokerage firms when they take their position. The deposits are intended to minimize the credit risk associated with futures contracts.

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Definitions:

Fixed Manufacturing Overhead

Costs that do not vary with the level of production or sales, such as salaries of factory supervisors and rent of the manufacturing facility.

Materials Price Variance

The difference between the actual cost of raw materials and the standard cost multiplied by the quantity of materials purchased, used as a measure of cost control.

Direct Labor Variances

The differences between the budgeted and actual costs of direct labor used in production.

Direct Labor

The labor cost directly associated with the production of goods or services, including wages for workers who physically produce a product.