Johansson Company Developed the Following Static Budget at the Beginning

question 133

Multiple Choice

Johansson Company developed the following static budget at the beginning of the company's accounting period: $$\begin{array} { l r } \text { Revenue } ( 8,000 \text { units } ) & \$ 16,000 \\\text { Variable costs } & \underline { 4,000 } \\\text { Contribution margin } & \$ 12,000 \\\text { Fixed costs } & \underline { 4,000 } \\\text { Net income } & \$ 8,000\end{array}$$ If the actual volume of sales was 8,200 units, the flexible budget would show variable costs of

• A) $16,400.
• B) $4,000.
• C) $4,100.
• D) $4,800.

Apply the cost of capital concepts, including the weighted average cost of capital (WACC), in project evaluation.

Understand and calculate the cost of equity and debt financing.

Evaluate the effect of a project's risk on its required rate of return and capital cost.

Apply the dividend growth model to determine stock prices.

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