Suppose the Desired Reserve Ratio Is 10 Per Cent

question 157

Multiple Choice

Suppose the desired reserve ratio is 10 per cent.If Urban Bank has total deposits of $1,000 and total assets of $10,000,the amount of desired reserves is

• A)$1,000.
• B)$100.
• C)$900.
• D)$1,100.
• E)$9,000.

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Definitions:

Fixed Manufacturing Overhead

refers to the manufacturing costs that do not vary with the volume of production, such as rent and salaries.

Job-Order Costing System

An accounting method used to allocate costs to specific jobs or orders, typically used in situations where products or services are distinct and made to order.

Predetermined Overhead Rate

An estimated charge per unit of activity used to allocate manufacturing overhead costs to products or job orders, calculated before the period begins based on expected costs and activity levels.

Machine-Hours

A measure of the amount of time a machine is operated in the production process, used as a basis for allocating manufacturing overhead.