A company with 99,006 authorized shares of $8 par common stock issued 48,828 shares at $13 per share. Subsequently, the company declared a 2% stock dividend on a date when the market price was $22 a share. What is the amount transferred from the retained earnings account to paid-in capital accounts as a result of the stock dividend? A. $43,563
B. $21,484
C. $7,812
D. $13,672

$21,484

Explanation:

A company has 99,006 authorized shares of $8 par

The common stock was issued at 48,828 shares at the price of $13 for one share

The company made a 2% dividend declaration

= 2/100

= 0.02

The market price is $22 per share

Therefore, the amount that was transferred from the retained earnings account to the paid-in capital accounts can be calculated as follows

= 48,828 shares × 0.02 × $22

= $21,484

Hence the amount that was moved from the retained earnings account to the paid-in capital accounts as a result of stock dividend is $21,484

option (a) is correct, $ 2400

Explanation:

Given:

Direct materials cost = $ 700

Direct labour cost = $ 1300

Variable overhead = $ 400

Transfer price is relevant cost for Engine division

Now,

the relevant cost is variable cost

Also, variable cost is given as;

variable cost =   Direct material + Direct labor + Variable overhead

on substituting the values in the above formula, we get

variable cost =   $ 700 + $ 1,300 + $ 400

or

variable cost = $ 2400

Hence, option (a) is correct