The High Foreign Exchange Value of the U

question 151

Multiple Choice

The high foreign exchange value of the U.S.dollar in the early 1980s can best be explained by

• A) additional investment funds made available from overseas.
• B) lack of investor confidence in U.S. fiscal policy.
• C) market expectations of rising inflation in the United States.
• D) American tourists overseas finding costs increasing.

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Definitions:

Fixed Manufacturing Overhead

Indirect manufacturing costs that do not vary with the level of production, such as salaries of managers and depreciation of factory equipment.

Variable Manufacturing Overhead

Costs associated with manufacturing that vary directly with the levels of production output, such as raw materials and labor.

Overhead Applied

The allocated manufacturing overhead costs to individual products or jobs based on a predetermined rate.

Predetermined Overhead Rate

A rate calculated before the year begins, used to allocate estimated overhead costs to products based on a chosen activity base.