If the Nominal Interest Rate Is 5

question 129

Multiple Choice

If the nominal interest rate is 5.5 percent and expected inflation rate is 3 percent,the real interest rate equals

• A) 8.5 percent.
• B) 2.5 percent.
• C) 13.5 percent.
• D) 11.5 percent.
• E) none of the above

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Definitions:

Variable Manufacturing Overhead

Indirect production costs that fluctuate with the level of output, including utilities and supplies that vary with production volume.

Labor Rate Variance

The difference between the actual hourly labor rate and the standard rate, multiplied by the number of hours worked during the period.

Overhead Rate Variance

Overhead Rate Variance is the difference between the actual overhead costs incurred and the overhead costs allocated based on a predetermined rate.

Variable Overhead Efficiency Variance

The difference between the actual hours taken to produce an item and the standard hours expected, multiplied by the standard variable overhead rate.