A New Bank Has Reserves of $600,000,checkable Deposits of $500,000,and

question 91

Multiple Choice

A new bank has reserves of $600,000,checkable deposits of $500,000,and government securities of $100,000.If the desired reserve ratio is 10 percent,the amount of loans this bank can make is

• A)$50,000.
• B)$60,000.
• C)$540,000.
• D)$550,000.
• E)$600,000.

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Definitions:

Absorption Costing

A costing method that assigns all manufacturing costs, both fixed and variable, to products.

Net Income

The total earnings of a company after subtracting all expenses from revenue.

Variable Costing

A costing method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in the cost of a product.

Absorption Costing

A system for determining product costs that encompasses all manufacturing expenses, including direct materials, direct labor, and overheads, regardless of them being fixed or variable.