Trahern Baking Co. common stock sells for $32.50 per share. It expects to earn $3.50 per share during the current year, its expected dividend payout ratio is 65%, and its expected constant dividend growth rate is 6.0%. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of equity from new common stock?
A. 12.70%
B. 13.37%
C. 14.04%
D. 14.74%
E. 15.48%
Answer: B
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Housholder Corporation uses a predetermined overhead rate base on machine-hours that it recalculates at the beginning of each year. The company has provided the following data for the most recent year. Estimated total fixed manufacturing overhead from thebeginning of the year$310,000 Estimated activity level from the beginning of the year 20,000machine-hoursActual total fixed manufacturing overhead$338,000 Actual activity level 18,300machine-hours The amount of manufacturing overhead that would have been applied to all jobs during the period is closest to:
A. $310,000 B. $283,650 C. $28,000 D. $309,270
Employees should set aside their own personal value systems when making ethical decisions for their companies
Indicate whether the statement is true or false
A company uses the following standard costs to produce a single unit of output. Direct materials6 pounds at $0.90 per pound=$5.40 Direct labor0.5 hour at $12.00 per hour=$6.00 Manufacturing overhead0.5 hour at $4.80 per hour=$2.40 During the latest month, the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400. Based on this information, the total direct materials cost variance for the month was:
A. $5,800 favorable B. $4,000 favorable C. $4,000 unfavorable D. $1,800 favorable E. $5,800 unfavorable
The basic difference between a master budget and a flexible budget is that a:
A. flexible budget allows management latitude in meeting goals whereas a master budget is based upon a fixed standard. B. master budget is for an entire production facility but a flexible budget is applicable to single departments only. C. master budget is based on one specific level of production and a flexible budget can be prepared for any production level within a relevant range. D. flexible budget considers only variable costs but a master budget considers all costs.