Assume Stansfield Corporation Is Utilizing Its Fixed Assets at 90

question 252

Multiple Choice

Assume Stansfield Corporation is utilizing its fixed assets at 90% capacity. Assume costs, current liabilities, and current assets vary directly with sales, and that the dividend payout ratio remains unchanged. If sales increase by 20%, what will total fixed assets be?

• A) $256 million
• B) $286 million
• C) $313 million
• D) $359 million
• E) $470 million

---

Definitions:

Negotiable

Capable of being transferred or modified through discussion or upon reaching an agreement.

Oral Promise

An oral promise is a commitment or assurance given verbally rather than in written form, which may or may not be legally enforceable depending on the context.

Negotiable

A characteristic of a financial instrument (like a check or bill of lading) that allows it to be transferred from one party to another as a form of payment or investment.

Contract Formation

The process by which parties agree to terms that are legally binding and enforceable.