Consider Each of These Forms of Investment

question 162

Essay

Consider each of these forms of investment. Identify whether it is constitutes investment spending, an investment in physical assets, or a financial investment.
a. You purchase a 1965 Ford Mustang.
b. You buy 50 shares of stock in the Ford Motor Company.
c. Ford Motor Company builds a new plant in Tennessee.

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Definitions:

Variable Manuf. Overhead

Expenses associated with manufacturing that vary directly with the level of production output, such as materials and utilities.

Standard Variable Overhead Rate

A predetermined rate applied to estimate the variable overheads based on a specific activity base.

Standard Hours Per Unit

The estimated time required to produce one unit of a product under standard operating conditions.

Actual Output

The real quantity of goods or services produced by a company, as opposed to estimated or planned production levels.