During a Recession,lending Typically Declines Because

question 110

Multiple Choice

During a recession,lending typically declines because:

• A) banks need to hold less as a cushion for themselves.
• B) asset prices fall and therefore the net worth of firms declines as well,making them look riskier to banks.
• C) there are fewer collateral shocks.
• D) there is more demand for investment funding.

Compute the amount of fixed manufacturing overhead released from or deferred in inventories.

Analyze the impact of production and sales levels on net operating income under both costing methods.

Recognize the financial statement presentation and implications of absorption and variable costing methods.

Assess the effect of beginning and ending inventories on net operating income under absorption costing.

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Definitions:

Machine-Hours

A measurement of the amount of time machines are in operation, used to allocate machine-related costs to products.

Fixed Manufacturing Overhead Cost

Expenses related to manufacturing that do not change with the level of production, such as rent, salaries, and depreciation on equipment.

Variable Manufacturing Overhead

These are costs that vary with production volume, such as utilities for the manufacturing plant, but cannot be directly traced to specific units of product.

Direct Labor-Hours

Direct labor-hours are the total hours worked by employees directly involved in the production of goods or services, used for costing and operational efficiency assessment.