ABC Has 45,000 Shares of $10 Par Common Stock Outstanding

question 37

Multiple Choice

ABC has 45,000 shares of $10 par common stock outstanding. They offer a stock split of 4-for-1. The effect of the split will be:

• A)par stays at $10; total shares go to 11,250.
• B)par drops to $5; total shares stay at 45,000.
• C)par drops to $2.50; total shares go to 180,000.
• D)par goes to $40; total shares go to 180,000.

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Definitions:

Predetermined Overhead Rate

The rate at which overhead costs are applied to products or services, estimated before the costs are incurred.

Departmental Predetermined

A rate calculated at the start of the accounting period, used to allocate overhead costs to products based on department-specific criteria.

Overhead Rate

A measure used to calculate how much overhead cost should be allocated to each unit of production, often based on direct labor hours or machine hours.

Assembly Department

A division within a manufacturing facility where parts are put together to form a finished product.