The Administration Costs of a Loan,as a Proportion of the Total

question 197

Multiple Choice

The administration costs of a loan,as a proportion of the total cost of the loan,typically _____

• A)decrease as the size of the loan increases, lowering the interest rate.
• B)decrease as the size of the loan increases, increasing the interest rate.
• C)increase as the size of the loan increases, lowering the interest rate.
• D)increase as the size of the loan increases, increasing the interest rate.
• E)increase as the size of the loan increases, leaving the interest rate unchanged.

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Definitions:

Machine-Hours

A measurement of the amount of time machines are in operation, used to allocate machine-related costs to products.

Fixed Manufacturing Overhead Cost

Expenses related to manufacturing that do not change with the level of production, such as rent, salaries, and depreciation on equipment.

Variable Manufacturing Overhead

These are costs that vary with production volume, such as utilities for the manufacturing plant, but cannot be directly traced to specific units of product.

Direct Labor-Hours

Direct labor-hours are the total hours worked by employees directly involved in the production of goods or services, used for costing and operational efficiency assessment.