A Company Originally Issues 180,000 Shares of Stock at a Price

question 242

Multiple Choice

A company originally issues 180,000 shares of stock at a price of $22;one year later the stock price is $40 per share,the number of outstanding shares is unchanged,and the company's net income for the year is $230,400.The P/E ratio at the end of the recent year is:

• A)0.0002.
• B)24.22.
• C)31.25.
• D)0.0001.

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Definitions:

Direct Labor Standards

Direct labor standards are predetermined measures for the amount of labor time and cost that should be associated with producing a unit of product or performing a service.

Standard Cost Variances

The differences between the actual costs and the standard costs for manufacturing or service processes, used to control and manage expenses.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including material and labor costs.

Retained Earnings

The portion of net income that is kept by a company rather than distributed to its shareholders as dividends, often used for reinvestment.