Ale Corporation Had Net Income of $240000 and Paid Dividends

question 201

Multiple Choice

Ale Corporation had net income of $240000 and paid dividends to common stockholders of $40000 in 2017. The weighted average number of shares outstanding in 2017 was 60000 shares. Ale Corporation's common stock is selling for $76 per share on the New York Stock Exchange. Ale Corporation's price-earnings ratio is

• A) 3.2 times.
• B) 22.8 times.
• C) 19 times.
• D) 12.7 times.

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Definitions:

Predetermined Overhead

A calculated rate used to estimate the manufacturing overhead costs for a specific period, based on projected or historical data.

Job Cost Sheets

Documents that record and track the costs associated with a specific job or project.

Direct Materials

Fundamental materials directly identifiable in the creation of a product.

Direct Labor

The labor costs directly tied to the production of goods or the performance of services.