Greenway Industries Is a Major Multinational Conglomerate

question 57

Multiple Choice

Greenway Industries is a major multinational conglomerate. Its business units compete in a range of industries, including home appliances, pharmaceuticals, commercial real estate, and plastics manufacturing. Although its largest business unit, which produces kitchen appliances, is among the most profitable in the industry, it generates only 35 percent of the company's revenues. Which of the following is most likely true of Greenway's stock price?

• A) It is valued at less than the sum of its individual business units.
• B) It is valued at greater than the sum of individual business units.
• C) It is valued at the exact sum of individual business units.
• D) It is consistently lower than the industry average.

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Definitions:

Direct Materials Price Variance

The difference between the actual cost and the standard cost of materials used in production, indicating how efficiently materials are being purchased.

Standard Price

Standard price is a predetermined cost assigned to materials and goods, used in budgeting and costing calculations.

Actual Price

The real price at which a transaction takes place, unaffected by any discounts or premiums.

Variable Budget

A budget that adjusts spending levels based on changes in actual revenue or other financial indicators.