Short-Term Marketable Securities Are Held for Two Separate and Distinct

question 21

True/False

Short-term marketable securities are held for two separate and distinct purposes: (1) to provide liquidity as a substitute for cash and (2) as a non-operating investment.Marketable securities held while awaiting reinvestment are not available for liquidity purposes.

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Definitions:

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to individual jobs or units based on a certain activity base, such as labor hours or machine hours, calculated before the period begins.

Machine-Hours

A measure of production or work volume calculated by the number of hours machines are operating.

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products or job orders, calculated by dividing estimated overhead costs by an allocation base.

Direct Labor-Hours

The total hours worked by employees who are directly involved in the production process, used as a basis for allocating costs to products.