The Homer Corporation Produces Two Products, and Reports the Following

question 2

Multiple Choice

The Homer Corporation produces two products, and reports the following production and cost information for the most recent accounting period.

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Using activity-based costing for assigning overhead costs, the activity rate for machine setups is:

• A) $60 per setup
• B) $100 per setup
• C) $120 per setup
• D) $240 per setup
• E) $80 per setup

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Definitions:

T-bill Rate

The yield or interest rate on Treasury bills, which are short-term debt securities issued by the U.S. government.

Futures Contract

A standardized legal agreement to buy or sell a particular commodity or financial asset at a predetermined price at a specified time in the future.

Spot Price

The present market cost at which an asset can be purchased or sold for instant delivery.

Contract Maturity

The specified date on which the contract expires and the financial transaction must be settled or completed.