The Floristan Company Has 50,000 Shares of Preferred Stock Outstanding

question 118

Multiple Choice

The Floristan Company has 50,000 shares of preferred stock outstanding, with annual dividends paid at the rate of $2 per share. Floristan also has 100,000 shares of common stock outstanding. If the Floristan Company declares a $150,000 dividend, each outstanding share of common stock would receive:

• A)$1.50.
• B)$1.00.
• C)$0.50.
• D)$2.00.

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Definitions:

Variable Inputs

Inputs in production that change in quantity depending on the level of output, such as raw materials and labor.

Marginal Cost

The expense associated with manufacturing an extra unit of a product or service.

Average Fixed Cost

is calculated by dividing the total fixed costs of production by the quantity of output produced, showing the cost per unit of output.

Total Variable Cost

The sum of all variable expenses related to the production of goods or services, which vary with the level of output.