A Futures Contract

question 91

Multiple Choice

A futures contract

• A) gives the owner the right,but not the obligation,to buy shares of a stock at a specified price within the time limits of the contract.
• B) gives the owner the right,but not the obligation,to sell shares of a stock at a specified price within the time limits of the contract.
• C) is a contract in which the seller agrees to provide a particular good to the buyer on a specified future date at an agreed-upon price.
• D) gives the owner the right,but not the obligation,to buy or sell shares of a stock at a specified price within the time limits of the contract.

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Definitions:

SQ × AP

The standard quantity times actual price formula, used in cost accounting to calculate the variance between the actual cost and the standard cost of raw materials.

Direct Materials Price Variance

The difference between the actual cost and the standard cost of direct materials used in production, indicating how effectively the materials budget is being adhered to.

Per-Unit Standards

Estimates of the direct materials, direct labor, and manufacturing overhead costs required to produce one unit of a product.

Direct Labor Price Variance

The difference between the actual cost of direct labor and the expected (or standard) cost of direct labor used during production.