Which of the Following Statements Is Most Correct

question 22

Multiple Choice

Which of the following statements is most correct?

• A) A firm can use retained earnings without paying a flotation cost. Therefore, while the cost of retained earnings is not zero, the cost of retained earnings is generally lower than the after-tax cost of debt financing.
• B) The capital structure that minimizes the firm's cost of capital is also the capital structure that maximizes the firm's stock price.
• C) The capital structure that minimizes the firm's cost of capital is also the capital structure that maximizes the firm's earnings per share.
• D) If a firm finds that the cost of debt financing is currently less than the cost of equity financing, an increase in its debt ratio will always reduce its cost of capital.
• E) Statements a and b are correct.

Understand how to calculate materials price and quantity variances.

Understand and calculate the total variable overhead spending variance.

Understand the impact of actual vs. standard machine-hours on overhead variances.

Apply standard costing methods to recording transactions in a worksheet.