Speculators Buy Futures Contracts Whereas Hedgers Sell Them

question 72

True/False

Speculators buy futures contracts whereas hedgers sell them.

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Definitions:

Absorption Costing

Absorption costing is an accounting method that includes all manufacturing costs - direct labor, direct materials, and both variable and fixed manufacturing overhead - in the cost of a product.

Product Cost

The total cost associated with making or acquiring a product, including materials, labor, and overhead expenses.

Variable Costing

A costing method that includes only variable manufacturing costs in product costs and treats fixed manufacturing costs as period costs.

Finished Goods

Completed products ready for sale or shipment to customers, found as an inventory category in the balance sheet.