In a Severe Banking Crisis

question 30

Multiple Choice

In a severe banking crisis:

• A)very few banks in the system actually go into bankruptcy.
• B)government intervention usually is not required, since the market outcome is always preferable to one that results from government intervention.
• C)the economy usually falls into a severe recession followed by a slow recovery.
• D)economic growth usually resumes quickly after the crisis is resolved.

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Definitions:

Standard Costing System

A cost accounting system that uses standard costs for materials, labor, and overhead to control actual costs and measure performance.

Fixed Overhead Volume Variance

The difference between the budgeted and actual volume of production, multiplied by the fixed overhead rate, indicating inefficiencies in utilizing production capacities.

Direct Labour Hours

A measure of the amount of time workers spend directly manufacturing a product, which is often used to allocate manufacturing overhead in product costing.

Standard Costing System

An accounting method that uses estimated costs for planning and decision-making purposes.