A Change in the Company's Capital Structure Will Change the Amount

question 77

True/False

A change in the company's capital structure will change the amount of taxes paid but will not change the WACC.

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Definitions:

Variable Component

A portion of costs that varies directly with the level of production or operation activity.

Predetermined Overhead Rate

An estimated rate used to assign overhead costs to products or services, based on a planned amount of cost and activity level.

Fixed Manufacturing Overhead

Costs that do not vary with the level of production output, such as rent and salaries of managerial staff.

Fixed Manufacturing Overhead

Indirect production costs that remain constant regardless of the level of production.