Research Has Shown All of the Following to Be True

question 14

Multiple Choice

Research has shown all of the following to be true of the way corporations determine dividends except:

• A) Firms have short-run target payout ratios.
• B) Firms have long-run target payout ratios.
• C) The focus is more on dividend changes rather than absolute dividends.
• D) Managers try to avoid dividend changes that may need to be reversed.

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Definitions:

Flexible Budgets

A budget that adjusts or flexes with changes in volume or activity, allowing for a more accurate comparison of actual spending with budgeted amounts for different levels of activity.

Actual Overhead

The real costs incurred for indirect materials, labor, and expenses in operating a business.

Budgeted Manufacturing

The process of estimating the costs of production for a specific period, including materials, labor, and overhead.

Relevant Range

The band of production or activity levels within which the assumptions about cost behavior for a company remain valid.