If a firm needs additional capital from equity sources once its retained earnings breakpoint is reached, it will have to raise the capital by issuing new common stock.

false: firms raise capital from retained earnings only when they cannot issue new common stock due to market conditions outside of their control.
true: firms will raise all the equity they can from retained earnings before issuing new common stock, because capital from retained earnings is cheaper than capital raised from issuing new common stock.

Performance bicycle company makes steel and titanium handle bars for bicycles. it requires approximately 1 hour of labor to make one handle bar of either type. during the most recent accounting period, barr company made 7,700 steel bars and 2,300 titanium bars. setup costs amounted to $35,000. one batch of each type of bar was run each month. if a single company-wide overhead rate based on direct labor hours is used to allocate overhead costs to the two products, the amount of setup cost assigned to the steel bars will be: