According to Tobin's Q Theory,if Q Is ________,New Plant and Equipment

question 28

Multiple Choice

According to Tobin's q theory,if q is ________,new plant and equipment capital is ________ relative to the market value of business firms,so companies can buy a lot of new investment goods with only a ________ issue of stock.

• A)high;dear;large
• B)high;cheap;large
• C)high;cheap;small
• D)low;cheap;large
• E)low;cheap;small

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Definitions:

Manufacturing Overhead

All indirect costs related to manufacturing that cannot be directly traced to specific items produced, such as factory rent, utilities, and equipment depreciation.

Variable Costing

An accounting approach that only considers variable costs—costs that change with the level of output—in product costing and decision-making.

Absorption Costing

A financial technique that encompasses all costs associated with manufacturing (including both fixed and variable expenses) in the pricing of a product.

Contribution Format

A layout for income statements where costs are classified as variable or fixed to show the contribution margin and net operating income.