A Commitment Fee Is a Fee Charged on Unused Balance

question 98

True/False

A commitment fee is a fee charged on unused balance of a revolving credit agreement to compensate the bank for guaranteeing that the funds will be available when needed by the borrower.

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Definitions:

Labor Efficiency Variance

The difference between the actual labor hours used and the standard labor hours expected, multiplied by the standard labor rate.

Direct Materials

Raw materials that can be directly traced to the production of specific goods or services.

Direct Labor-Hours

The sum of hours contributed by personnel directly employed in the process of manufacturing.

Variable Overhead

Costs that fluctuate with the level of production activity, such as utilities or raw materials.