In 2019, Algiers Inc

question 80

Multiple Choice

In 2019, Algiers Inc. issued 10,000 no par value convertible preferred shares for $ 103 each. One preferred share can be converted into three shares of Algiers' no par value common shares at the option of the shareholder. In August 2020, all of the preferred shares were converted into common shares. The market value of the common shares at the date of the conversion was $ 30 per share. What amount should be credited to Common Shares as a result of this conversion?

• A) $ 300,000
• B) $ 500,000
• C) $ 900,000
• D) $ 1,030,000

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Definitions:

Variable Overhead Rate

The rate at which variable overhead costs are allocated to each unit of production, based on a certain activity level.

Direct Labor-Hours

Comprehensive work time recorded by employees who are directly engaged in producing goods.

Denominator Level

The level of activity chosen to allocate fixed costs in absorption costing, often representing capacity or expected production volume.

Variable Overhead Rate

the rate at which variable overhead costs are applied to units of production, often used in calculating the total cost of producing a product.