Explain why companies form hedging agreements with their suppliers
What will be an ideal response?
Answer: Companies protect themselves against future price increases by hedging, arranging contracts that allow them to buy supplies in the future at designated prices. The obvious risk of hedging against rising prices is that prices could instead drop over the duration of the contract, leaving a company paying more than it would have to otherwise.
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In allocating fixed costs to products in activity-based costing,
a. direct labor hours should always be used as the allocation base. b. a company should use the same allocation base that it uses for variable costs. c. a cost driver that is not volume-related should be used. d. machine hours should always be used.
Approximately two-thirds of the exports from developed countries go to developed countries.
Answer the following statement true (T) or false (F)
Which of the following would be an example of a fixed cost?
A) raw materials B) sales commissions C) utilities D) property taxes
Adam moved into an apartment complex. The rules of the complex prohibit unmarried men and women from living together in the same apartment. When Adam's friend, Diane, moved into the apartment he was served with eviction papers. Adam claims the apartment complex is violating his constitutional rights since it allows married couples to live together. Is Adam right?
a. Yes. His equal protection rights have been violated. b. No. His fundamental right of cohabitation has not been violated. c. Yes. He and Diane are being treated differently than married couples. d. No. Constitutional protections do not extend to privately owned apartment complexes.