The Amount Paid at the Time a Futures Contract Is

question 51

Multiple Choice

The amount paid at the time a futures contract is sold

• A) represents the maximum loss for the buyer of the contract.
• B) represents the maximum profit for the buyer of the contract.
• C) is the initial margin deposit.
• D) is the total value of the goods being traded in the future.

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Definitions:

Variable Costing

An accounting method that includes only variable costs—direct materials, direct labor, and variable manufacturing overhead—in product cost calculations.

Unit Product Cost

The total cost associated with producing a single unit of a product, including materials, labor, and overhead.

Common Fixed Expenses

Ongoing expenses that do not vary with production volume or business activity, shared across departments or products.

Business Segments

Distinct parts of a company that can be separately analyzed for profitability and operational efficiency.