For a Large Firm That Produces and Sells Automobiles, Which

question 223

Multiple Choice

For a large firm that produces and sells automobiles, which of the following costs would be a variable cost?

• A)the unemployment insurance premium that the firm pays to the state of Missouri that is calculated based on the number of worker-hours that the firm uses
• B)the cost of the steel that is used in producing automobiles
• C)the cost of the electricity of running the machines on the factory floor
• D)All of the above are correct.

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Definitions:

Preferred Stockholders

Investors who own preferred shares in a company, with rights to dividends before common stockholders and priority in asset distribution.

Dividends in Arrears

Dividends on preferred stock that have been declared but not paid to shareholders.

Stock Split

A corporate action where a company divides its existing shares into multiple shares to boost the liquidity of the shares, though the overall market capitalization remains the same.

Par Value

Par value is the nominal or face value of a stock or bond as stated by the issuer, which often bears no relation to its market value.