Which Statement Is False Regarding Capital Structure Under Dividend Imputation

question 30

Multiple Choice

Which statement is false regarding capital structure under dividend imputation?

• A)Misleading results regarding the gain from leverage may appear if a company is not at its optimal dividend policy.
• B)Dividend policy decisions are probably more important than capital structure decisions.
• C)It is not possible to have a negative gain from leverage.
• D)If the dividend payout ratio is 1,a gain from leverage may result,providing that investors with equal marginal tax rates hold equity and debt.

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Definitions:

Standard Cost Variances

refer to the differences between the expected (standard) costs and the actual costs incurred.

Standard Cost System

A cost accounting system that assigns expected costs to each product or service, facilitating variance analysis between expected and actual costs.

Direct Labor Cost

The sum of all expenses associated with labor that is directly used in the creation of products or services.

Labor Efficiency Variance

A measure of the difference between the actual hours worked and the standard hours expected, to produce a certain level of output.