The Balance in Retained Earnings at the Beginning of the Year

question 109

Multiple Choice

The balance in Retained Earnings at the beginning of the year was $2,710,000, and there were no dividends in arrears. Net income for 2009 was $2,250,000. What was the amount of dividend declared on each share of common stock during 2009?

• A) $1.30.
• B) $2.40.
• C) $1.21.
• D) $3.72.

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Definitions:

Manufacturing Margin

Similar to contribution margin but specifically related to manufacturing, it evaluates the difference between manufacturing costs and the sales price of goods.

Contribution Margin

The amount by which a product's selling price exceeds its total variable costs, indicating the contribution towards covering fixed costs.

Operating Income

Earnings from a company's primary business activities, excluding costs and expenses, interest, and taxes.

Absorption Costing

An approach to accounting that integrates all costs associated with manufacturing - including direct materials, direct labor, and overhead costs, no matter if they are variable or fixed, into the final cost of a product.