The Abel Company Provided the Following Information from Its Financial

question 143

Multiple Choice

The Abel Company provided the following information from its financial records: $\begin{array}{|l|r|l|r|}\hline \text { Net income } & \$ 250,000 & \text { Common shares outstanding 1/1 } & 200,000 \\\hline \text { Common stock dividends } & \$ 20,000 & \text { Common shares outstanding 12/31 } & 300,000 \\\hline \text { Preferred stock dividends } & \$ 25,000 & \text { Preferred shares outstanding 1/1 } & 10,000 \\\hline \text { Sales } & \$ 1,000,000 & \text { Preferred shares outstanding 12/31 } & 6,000 \\\hline\end{array}$ What is the amount of the company's earnings per share?

• A) $0.82
• B) $1.00
• C) $0.90
• D) $0.75

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Definitions:

Average Total Cost

The total cost of producing a certain quantity of a good divided by that quantity, representing the cost per unit of output.

Total Fixed Costs

The total of all expenses that do not change with the amount of production or output.

Total Variable Costs

The sum of all costs that change with the level of output, such as materials and labor directly involved in production.

Average Fixed Cost

The total fixed costs of production divided by the quantity of output produced.