Franz Began Business at the Start of This Year and Had

question 35

Multiple Choice

Franz began business at the start of this year and had the following costs: variable manufacturing cost per unit, $9; fixed manufacturing costs, $60,000; variable selling and administrative costs per unit, $2; and fixed selling and administrative costs, $220,000. The company sells its units for $45 each. Additional data follow. $\begin{array}{lr}\text { Planned production in units } & 10,000 \\\text { Actual production in units } & 10,000 \\\text { Number of units sold } & 8,500\end{array}$ There were no variances.
Income reported under absorption costing and variable costing is:

• A) always the same.
• B) typically different.
• C) always higher under absorption costing.
• D) always higher under variable costing.
• E) always the same or higher under absorption costing.

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Definitions:

Leverage Ratio

A leverage ratio is a financial metric used to measure the level of debt used by a business in relation to its equity or assets, indicating the financial health and risk of the entity.

Reserve Requirement

The minimum amount of reserves that a bank must hold against its deposits as mandated by central banking regulations, affecting the bank's capacity to lend.

Excess Reserves

The funds that banks hold over and above the required minimum set by central banking authorities, often seen as an indicator of the banking system's health.

Money Supply

The total amount of monetary assets available in an economy at a specific time, including both cash and digital money.