If the Desired Reserve Ratio Is 3 Percent and Deposits

question 183

Multiple Choice

If the desired reserve ratio is 3 percent and deposits totaled $575 billion, banks would hold

• A) $1,725 billion in currency.
• B) $17.25 billion in excess reserves.
• C) $534.75 in reserves.
• D) $17.25 billion in reserves.

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Definitions:

Variable Overhead

Costs of indirect materials, indirect labor, and other operations that fluctuate with the level of production output.

Direct Labor-Hours

A measure of the amount of time workers spend directly manufacturing a product or performing a service.

Materials Quantity Variance

The variance arising from the actual amount of materials utilized in manufacturing compared to the anticipated standard quantity, times the standard expense for each unit.

Labor Efficiency Variance

The variance between the number of hours actually worked and the anticipated standard hours, times the normal rate per hour.