Preferred Stock with a $100 Par Value and a 5

question 307

Multiple Choice

Preferred stock with a $100 par value and a 5 percent dividend is currently trading on the market at $90 per share.What is the amount of the dividend the holder is entitled to receive each year on each share?

• A)$90
• B)5 percent of $90
• C)5 percent of total corporate profits divided by the number of shares outstanding
• D)$5
• E)None of these

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Definitions:

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels.

Direct Materials Quantity Variance

The difference between the actual quantity of direct materials used in production and the standard quantity expected to be used, multiplied by the standard cost per unit.

Direct Material Price Variance

The difference between the actual cost of direct materials and the standard cost multiplied by the quantity purchased, used in variance analysis for cost control.

Actual Price Per Pound

The real cost of a commodity or material expressed on a per pound basis.