A Forward Contract Differs from a Futures Contract in That

question 24

Multiple Choice

A forward contract differs from a futures contract in that:

• A) a forward contract is for a shorter period of time.
• B) a forward contract does not specify the selling price.
• C) a forward contract is not standardized.
• D) a forward contract is non-binding.

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Definitions:

Direct Labour-hours

The total number of hours worked by employees directly involved in the production process.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products, calculated before the period begins based on estimated costs and activity levels.

Direct Labour Hour

Direct labour hour is a measure of the amount of time workers spend on direct production activities, directly involved in manufacturing goods or providing services.

Manufacturing Overhead

Manufacturing expenses not directly linked to individual product units, encompassing indirect materials and labor.