Three Days Ago, You Entered into a Futures Contract to Sell

question 51

Multiple Choice

Three days ago, you entered into a futures contract to sell €62,500 at $1.50 per €. Over the past three days the contract has settled at $1.50, $1.52, and $1.54. How much have you made or lost?

• A)Lost $0.04 per € or $2,500
• B)Made $0.04 per € or $2,500
• C)Lost $0.06 per € or $3,750
• D)None of the above

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Definitions:

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to products based on a predetermined formula, typically involving estimated costs and activity levels.

Job Cost Sheet

A job cost sheet is a document or record that collects and summarizes the costs associated with a specific job or project, tracking materials, labor, and overhead.

Factory Overhead Account

An account that accumulates all indirect costs associated with the manufacturing process, excluding direct materials and direct labor.

Period Balance

The amount of money remaining at the end of a financial or accounting period, after all transactions have been accounted for.