Yesterday, You Entered into a Futures Contract to Buy €62,500

question 27

Multiple Choice

Yesterday, you entered into a futures contract to buy €62,500 at $1.50/€. Your initial margin was $3,750 (= 0.04 × €62,500 × $1.50/€ = 4 percent of the contract value in dollars) . Your maintenance margin is $2,000 (meaning that your broker leaves you alone until your account balance falls to $2,000) . At what settle price (use 4 decimal places) do you get a margin call?

• A)$1.4720/€
• B)$1.5280/€
• C)$1.500/€
• D)None of the above

Identify and explain the different types of variances, including price, quantity, rate, time, and volume variances.

Apply variance analysis in the context of managerial accounting to control costs and improve operational efficiency.

Interpret the significance of favorable and unfavorable variances in standard costing.

Differentiate between fixed and variable overhead costs and their impact on costs control.

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Definitions:

Mixed Cost

A cost that contains both variable and fixed cost elements, changing in response to changes in production or sales volumes.

Billing Expense

Costs incurred during the billing process, including materials, postage, and labor costs related to preparing and sending out invoices to customers.

Contribution Format

A layout of the income statement that distinguishes between fixed and variable expenses to emphasize the contribution margin.

High-low Method

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