Jangles Co

question 70

Multiple Choice

Jangles Co. earned $1.80 per share. Assuming a closing price of $40, the PE ratio is (round to the nearest whole answer) :

• A)7
• B)22
• C)72
• D)20
• E)None of these

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Definitions:

Absorption Costing

An accounting method that includes all direct costs and overhead expenses related to the production of a product in its cost base.

Variable Costing Income Statement

A financial statement format that only includes variable costs as product costs, with fixed manufacturing overhead treated as a period expense.

Variable Cost of Goods Sold

Costs that vary directly with the level of production, including raw materials and direct labor expenses.

Manufacturing Margin

The difference between the production cost and the selling price of goods, highlighting the profitability of manufacturing activities.