The Cost of Capital Is Defined as The

question 27

Multiple Choice

The cost of capital is defined as the:

• A)weighted average of the returns demanded by the company's stockholders and lenders.
• B)sum of liabilities and stockholders' equity accounts.
• C)rate of return demanded by the stockholders divided by the rate of return demanded by lenders.
• D)rate of return demanded by stockholders times the rate of return demanded by lenders.

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Definitions:

Variable Costing

A costing method that includes only variable manufacturing costs — direct materials, direct labor, and variable manufacturing overhead — in the cost of a product.

Unit Product Cost

The total cost incurred to produce, package, and place a product ready for sale, divided by the number of units produced.

Absorption Costing

An accounting method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed overhead—in the cost of a product.

Unit Product Cost

The calculation of the total cost (including materials, labor, and overhead) to produce a single unit of a product.