Morgan Corporation Has 60% of Its Capital Structure in the Form

question 22

Multiple Choice

Morgan Corporation has 60% of its capital structure in the form of equity capital.$200,000 in capital needs to be raised for a project but only $50,000 in funds is available through retained earnings.How much must be raised through common stock to maintain Morgan Corporation's capital structure?

• A) $70,000
• B) $50,000
• C) $120,000
• D) $90,000

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Definitions:

Activity Driver

An activity driver is a factor in activity-based costing that influences the costs of an activity, helping allocate costs more accurately to products or services.

Activity-based Costing

An accounting method that assigns costs to products or services based on the activities they require, promoting more accurate cost management.

Non-volume Driven

Pertains to costs that do not change with the level of production or service volume.

Product Costing System

An accounting methodology used to ascertain the total production cost of a product, by adding together the costs of direct materials, direct labor, and manufacturing overheads.