A Disadvantage Involved in Investing in Marketable Securities Is That

question 84

Multiple Choice

A disadvantage involved in investing in marketable securities is that

• A) this reduces the risk of illiquidity.
• B) this investment increases net working capital.
• C) this investment offers a flexible means of financing.
• D) these assets offer low rates of return, commensurate with their risk.

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Definitions:

Direct Labor-Hours

The total hours worked directly on the production of goods, used as a basis for allocating labor costs to products.

Departmental Predetermined Rates

Specific overhead rates calculated for each department within a company, used to allocate indirect costs more accurately.

Machine-Hours

A measure of the total time that machines are operated within a specific period, used for allocating manufacturing overhead costs to products.

Manufacturing Overhead

The indirect costs related to manufacturing that cannot be directly tied to a specific product, including costs of maintenance, electricity, and equipment depreciation.