The Merrill Lynch Case in 2002 Confirmed That Many Analysts

question 47

Multiple Choice

The Merrill Lynch case in 2002 confirmed that many analysts:

• A)were paid too much.
• B)were unable to accurately pinpoint earnings.
• C)gave buy recommendations to win investment banking business.
• D)shared private information about companies with investors.

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Definitions:

Fixed Manufacturing Overhead

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance of a manufacturing facility.

Predetermined Overhead Rate

A rate used to allocate overhead costs to products or job orders, based on estimated costs and activity levels.

Manufacturing Overhead

All manufacturing costs that are not directly attributable to a specific product, including indirect labor, maintenance, and utilities.

Machine-Hours

A measure of the total time machines are in operation during a given period, often used in cost accounting to allocate expenses based on machine usage.