Maintaining a Compensating Balance Will

question 39

Multiple Choice

Maintaining a compensating balance will:

• A)decrease the effective annual rate
• B)increase the effective annual rate
• C)not change the effective annual rate
• D)only change the effective rate if payments occur more frequently than annually

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Definitions:

Variable Overhead

Overhead costs that fluctuate with changes in production level or business activity, such as utilities for machinery.

Efficiency Variance

The difference between the standard cost of labor or materials for actual production and the actual cost incurred, reflecting how efficiently resources are utilized.

Direct Labor-Hours

The total hours worked directly on the production of goods or delivery of services.

Variable Overhead

Costs that vary with production volume, such as supplies and utilities for manufacturing.