Assume a Company Had Net Income of $20,000 and 8,000

question 78

Multiple Choice

Assume a company had net income of $20,000 and 8,000 shares of common stock outstanding the entire year. Also assume there were two potentially dilutive issues outstanding for the entire year:

What is diluted earnings per share for this company for the year?

• A) $2.50
• B) $2.40
• C) $2.11
• D) $2.00

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Definitions:

Departmental Overhead Rates

Refers to the allocation of indirect costs to specific departments within a company, which is used for cost control and pricing decisions.

Machine Hours

A measure of production activity; the total hours that machines are operating in a manufacturing process.

Direct Labor Hours

The total hours worked by employees directly involved in the manufacturing process of a product.

Departmental Overhead Rates

The overhead costs charged to specific departments based on their respective activities or consumption of resources.