You Would Like to Lock in the Selling Price on 55,000

question 76

Multiple Choice

You would like to lock in the selling price on 55,000 bushels of wheat, which you plan to harvest and deliver to the market in September. The September futures price quote is currently 912΄6. If you write September futures contracts on your wheat, you will be guaranteed a total price of _____ for your crop. Each contract is quoted in cents and 1/8 ths of a cent per bushel with a contract size of 5,000 bushels.

• A) $45,637.50
• B) $502,012.50
• C) $11,908.75
• D) $297,700.50
• E) $2,977,000.25

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Definitions:

Cost Formula

An equation used to calculate the total cost of a product or service, typically incorporating both fixed and variable costs.

Manufacturing Overhead

All manufacturing costs that are not directly assignable to specific units of product, including indirect labor and materials.

Total Variable Cost

The sum of all variable costs associated with the production of goods or services, which increases or decreases based on production volume.

Cost Change

Any variation, either an increase or decrease, in the total costs associated with production or operations.