In Canada,the Reason an APR Cannot Be Used as a Discount

question 36

Multiple Choice

In Canada,the reason an APR cannot be used as a discount rate in a mortgage calculation is

• A) because it has a different compounding frequency in a year than the payment frequency in a year.
• B) because it has the same compounding frequency in a year as the payment frequency in a year.
• C) because it has twice the compounding frequency in a year that the payment frequency in a year has.
• D) none of the above

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Definitions:

Direct Labor Hours

The total hours worked by employees directly involved in the production process, used as a measure for allocating labor costs to products or services.

Factory Overhead

All indirect costs associated with the production process, such as utilities, maintenance, and salaries for managers.

Overapplied Overhead

A situation where the allocated manufacturing overhead costs are more than the actual overhead costs incurred.

Overhead Incurred

The actual indirect costs experienced by a company during production, including utilities, rent, and salaries of employees not directly involved in production.