Which of the Following Statements Is Most Correct

question 28

Multiple Choice

Which of the following statements is most correct?

• A) If a firm repurchases its stock in the open market, the shareholders that tender are subject to capital gains taxes.
• B) If you own 100 shares in a company's stock, and the company does a 2- for-1 stock split, you will own 200 shares in the company following the split.
• C) Some dividend reinvestment plans increase the amount of equity capital available to the firm.
• D) All of the statements above are correct.
• E) Answers a and b are correct.

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Definitions:

Variable Production

Production costs that vary in total directly and proportionately with changes in the production level.

Fixed Production

Production levels set without regard to the varying levels of demand or activity, often resulting in constant output rates.

Machine-Hours

The total duration that machinery is utilized for production activities, expressed in hours, serving as a basis for allocating machine-related costs to products.

Manufacturing Overhead

All indirect costs associated with manufacturing, such as maintenance and repairs on equipment, utilities, and salaries for employees not directly involved in production.