Milton Company Reports the Following Information for the Current Year

question 14

Multiple Choice

Milton Company reports the following information for the current year: If the company's cost per unit of finished goods using absorption costing is $18, what is total fixed overhead?

• A) $225,000
• B) $180,000
• C) $270,000
• D) $315,000
• E) $720,000

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Definitions:

Sustainable Growth Rate

The maximum rate at which a company can grow its sales, earnings and dividends without needing to increase equity or borrowings.

Debt-Equity Ratio

The measure of a company's financial leverage, calculated by dividing its total liabilities by stockholders' equity.

Net Income

The overall earnings of a business following the deduction of all costs, taxes, and expenses from its gross revenue.

Sustainable Growth Rate

The maximum rate at which a company can grow its revenues and earnings without having to increase leverage or equity financing.