You Purchase 300 Shares of Stock on Margin at a Price

question 14

Multiple Choice

You purchase 300 shares of stock on margin at a price of $42 per share plus $150 in brokerage commissions at a time when the margin requirement is 50%.How much additional cash would you need to deposit with your broker if the price of the stock dropped to $37 per share?

• A) $825
• B) $1,500
• C) $1,650
• D) $5,550

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Definitions:

Manufacturing Overhead

The indirect costs associated with manufacturing a product, which include expenses such as equipment depreciation, utilities, and salaries for maintenance staff.

Direct Labor-Hours

A measure of the total hours worked directly on the manufacturing of goods.

Machine-Hours

A unit of measure indicating the operational time of machinery, often used in manufacturing to allocate costs based on machine usage.

Predetermined Overhead Rate

An estimated rate used to assign manufacturing overhead costs to individual units of production, calculated at the beginning of a period.