Bouncy Bungee Rubber Band Company Is Trying to Determine Its

question 12

Multiple Choice

Bouncy Bungee Rubber Band Company is trying to determine its probability of incurring a loss.Its fixed costs are $2,760,000 per year, it sells its rubber bands for $3.75 per pack and the variable cost of these packs is $.75.They estimate they will sell 1,000,000 packs this year and they have a standard deviation of 40,000 units.(A normal distribution table - Table V - must accompany this problem) .

• A)3.22%
• B)6.71%
• C)5.48%
• D)2.87%

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Definitions:

Common Stock

An equity security that represents ownership in a corporation, with rights to vote on corporate matters and receive dividends.

Par Common Stock

The nominal or face value assigned to a share of common stock as stated in the corporate charter, which has little relation to its market value.

Par Preferred Stock

A class of ownership in a corporation with a fixed dividend that is paid out before any dividends are paid to common stockholders.

Date Of Declaration

The specific date on which a company's board of directors announces the issuance of a dividend.