Variable Costs of Units Sold Internally Will Always Be

question 86

Multiple Choice

Variable costs of units sold internally will always be

• A) lower than the variable costs of units sold externally.
• B) higher than the variable costs of units sold externally.
• C) the same as the variable costs of units sold externally.
• D) Either higher or lower than for units sold externally.

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Definitions:

Forward Contract

A bespoke arrangement between two parties for acquiring or disposing of an asset at a designated price on an upcoming date.

Hedge

An investment made to reduce the risk of adverse price movements in an asset.

Speculative Forward Contract

A financial derivative used to speculate on the future price of an asset, involving an agreement to buy or sell the asset at a future date for a price determined today.

Fair Value Hedge

A risk management technique that uses financial instruments to mitigate the risk associated with changes in the fair value of an asset or liability.