A Credit Crunch Occurs When

question 40

Multiple Choice

A credit crunch occurs when

• A)interest rates decline.
• B)interest rates rise.
• C)creditors restrict the amount of loans they are willing to provide.
• D)the economy is strong.

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Definitions:

Variable Costing

A costing method that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in unit product costs.

Excess Capacity

The amount by which the actual production of a company exceeds its planned production capacity.

Variable Production Costs

Expenses that change in direct proportion to the level of production output.

Cost-Volume-Profit Analysis

An accounting method used to determine how changes in costs and volume affect a company's operating income and net income.