Butler Corporation Declared and Issued a 8% Stock Dividend on December

question 5

Multiple Choice

Butler Corporation declared and issued a 8% stock dividend on December 1. Prior to the declaration, Butler's retained earnings were $735,000, shares outstanding were 62,000, $5 par value, common stock with a current market value of $16 per share. As a result of recording this stock dividend total stockholders' equity will increase (decrease) by:

• A)$24,750
• B)$(79,360).
• C)$79,360.
• D)$0.

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Definitions:

Contribution Margin

The residual sum from sales income once variable expenses are subtracted, showing the extent to which it helps cover fixed expenses and create profit.

Variable Costs

Expenses that change in proportion to the activity of a business, such as utility costs that increase with higher production levels.

Fixed Costs

Costs that remain constant regardless of how much is produced or sold, including expenses like rent, salaries, and insurance.

Relevant Range

The span of activity or volume where the specific assumptions of cost behavior are considered valid.