Use the Information Below to Answer the Following Question(s)

question 6

Multiple Choice

Use the information below to answer the following question(s) .Low-Cost Rentals Ltd.incurred $60,000 of common fixed costs and $90,000 of common variable costs.Data are provided below for the capacity allowed and the capacity used. For both departments, common fixed costs are to be allocated on the basis of capacity available and common variable costs are to be allocated on the basis of capacity used.
-A disadvantage of allocating fixed costs using a budgeted rate and actual usage is that

• A)supplying division managers may be tempted underestimate usage when budgeting unit costs.
• B)the allocation would capture the cause-and-effect relationship.
• C)variation in usage will result in variances that need to be managed.
• D)changes in one department's usage should not affect another department's allocation.
• E)some organizations offer rewards to managers who make accurate forecasts.

Understand the calculation and implications of bond duration and modified duration.

Recognize the effects of yield changes on bond prices.

Identify and apply different bond immunization and swap strategies in portfolio management.

Analyze the impact of coupon rate, maturity, and yield to maturity on bond duration and price volatility.

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Definitions:

Statistically Significant

Statistically significant refers to a mathematical measure indicating that an observed pattern or relationship in data is not likely to occur due to chance.

Variation

The occurrence of differences within and among living organisms, resulting from genetic diversity or environmental factors.

Means

An average or central value derived from a set of numbers by adding them together and dividing by the number of values in the set.

Standard Deviation

A measure that quantifies the amount of variation or dispersion of a set of data values.