Global Company Makes a Product That Is Expected to Use

question 15

Multiple Choice

Global Company makes a product that is expected to use 2.2 pounds of material per unit of product.The material has a standard cost of $2 per pound.Global actually used 2.3 pounds of material per unit of product made in January.The actual cost of material was $1.95 per pound.Based on this information alone,the materials variances for the January production would be:

• A) Favorable for price and unfavorable for usage.
• B) Unfavorable for price and favorable for usage.
• C) Unfavorable for price and unfavorable for usage.
• D) Favorable for price and favorable for usage.

Determine the cost of new equity and the effect of flotation costs.

Analyze the impact of capital structure on WACC and company valuation.

Understand the difference between before-tax and after-tax cost of debt.

Calculate the required rate of return on preferred shares.

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Definitions:

Interest Rates

The cost of borrowing money, typically expressed as a percentage of the amount loaned, which can affect economic activity by influencing spending and saving behaviors.

Debit Card

A payment card that deducts money directly from a consumer’s checking account to pay for purchases.

Checking Account

A type of bank account that allows for easy access to funds for daily transactions through checks, debit cards, or electronic means.

M1

A category of the money supply that includes all physical currency, demand deposits, traveler's checks, and other checkable deposits.