Last Week,you Sold 400 Shares of Hi-Lo Stock for $12,400

question 26

Multiple Choice

Last week,you sold 400 shares of Hi-Lo stock for $12,400.The sale was a short sale with an initial margin requirement of 70 percent.The maintenance margin is 40 percent.Some positive news concerning the company was released last night and the stock price jumped this morning to $38 a share.What is your current margin position in this stock?

• A)61.33 percent
• B)56.67 percent
• C)48.33 percent
• D)38.68 percent
• E)25.83 percent

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Definitions:

Contribution Margin

Represents the amount of revenue remaining after deducting variable costs, contributing towards covering fixed costs and generating profit.

Production Capacity

The maximum volume of products or services a company can produce under normal working conditions.

Target Costing

A pricing method where the selling price of a product is determined first, and then production costs are managed to ensure the product can be produced within that target cost.

Variable Product Cost

Refers to the costs that vary directly with the level of production output, including costs like raw materials and direct labor.