When a fiRm Is Operating at Its Target Capital Structure

question 105

True/False

When a firm is operating at its target capital structure point, the debt-equity ratio is equal to 1.

---

Definitions:

Per Unit

Per unit refers to expressing measures, costs, or prices for individual items or quantities of items.

Absorption Costing

This accounting system ensures the inclusion of all manufacturing-related expenses, such as direct materials, direct labor, and both variable and fixed overheads, into the cost of producing a product.

Variable Costing

An accounting technique that incorporates just the variable costs of production (such as direct materials, direct labor, and variable manufacturing overhead) into the costs of products.

Fixed Overhead

Regular, static expenses that do not change with the level of production or sales, including rent, salaries, and insurance.