In a Forward Contract

question 3

Multiple Choice

In a forward contract

• A)the spot price is held constant.
• B)you can lock in today's price for the future.
• C)you can lock in a future price today.
• D)you can lock in a future quantity today.

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Definitions:

Equivalent Units

A concept used in process costing that converts partially completed units into a number of fully equivalent units for the purposes of accounting.

Direct Materials

Materials that can be directly linked to the production process of a product and are essential components of the final product.

First-In, First-Out Method

An inventory valuation method where the first items acquired are assumed to be sold first, affecting the cost of goods sold and ending inventory valuation.

Materials Cost

The direct and indirect costs associated with the raw materials used in the production of goods.