Exhibit 15-1 Balance Sheet of First Iliad State Bank

question 108

Multiple Choice

Exhibit 15-1 Balance sheet of First Iliad State Bank
               
       
In Exhibit 15-1, if the required reserve ratio is lowered to 8 percent, then First Iliad State will:

• A)have to convert loans worth $800,000 to required reserves
• B)have to convert loans worth $200,000 to required reserves.
• C)be able to make additional loans worth $800,000.
• D)be able to make additional loans worth $200,000.
• E)not have to act.

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Definitions:

High-low Method

A technique used in managerial accounting to estimate variable and fixed cost components of a cost by analyzing the highest and lowest activity levels.

Electrical Cost

Electrical cost refers to the expenses incurred from the use of electricity, often a significant component of utility costs for homes and businesses.

Machine-hour

A measure of the amount of time a machine is run, often used as a basis for allocating manufacturing overhead to products.

High-low Method

A technique used in cost accounting to estimate fixed and variable costs associated with production by using the highest and lowest levels of activity.