In the Context of a Futures Contract, the Basis Is

question 15

Multiple Choice

In the context of a futures contract, the basis is defined as ________.

• A) the futures price minus the spot price
• B) the spot price minus the futures price
• C) the futures price minus the initial margin
• D) the profit on the futures contract

---

Definitions:

Departmental Overhead Rate

The rate at which indirect costs are allocated to different departments within a company, often used for costing purposes.

Direct Labor Hours

The total number of hours worked by employees directly involved in manufacturing a product or providing a service, often used in calculating labor cost and efficiency.

Machine Hours

A measure of the amount of time a machine is operated, used in costing to allocate expenses based on how long a machine has been in use.

Setup Cost Per Unit

The cost associated with configuring or preparing equipment for manufacturing a batch of products, divided by the number of units produced.