As Long as the Revenue of the Last Unit Produced

question 40

Multiple Choice

As long as the revenue of the last unit produced and sold is greater than the cost of the last unit produced and sold,a firm should:

• A) continue manufacturing
• B) not use formula pricing
• C) continue using price equilibrium
• D) consider using sales maximization pricing
• E) reach its break-even point very shortly

Understand the operational and legal aspects related to the declaration and payment of cash dividends.

Analyze the effects of stock prices adjustments through mechanisms like stock repurchases, splits, and special dividends.

Grasp the informational content effect and its impact on stock prices upon changes in dividend policies.

Understand the concept of dividend clienteles and how they affect firm's dividend policy.

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Definitions:

Unit Product Cost

The total cost associated with producing one unit of product, including materials, labor, and overhead.

Variable Manufacturing Overhead

The portion of manufacturing overhead costs that varies directly with production volume.

Variable Costing

Accounting practice that integrates only variable cost elements of production (direct materials, direct labor, and variable manufacturing overhead) into the valuation of products.

Net Operating Income

The total profit of a company derived from its normal business operations, excluding expenses and revenues from non-operating activities.