The Balance Sheets at the End of Each of the First

question 177

Multiple Choice

The balance sheets at the end of each of the first two years of operations indicate the following: If net income is $115,000 and interest expense is $30,000 for 2012, and the market price is $30, What is the price-earnings ratio on common stock for 2012 (Round intermediate calculation to two decimal place and final answers to one decimal place) ?

• A) 16.9
• B) 12.1
• C) 14.4
• D) 13.3

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Definitions:

Management By Exception

The review of budget reports by top management focused entirely or primarily on differences between actual results and planned objectives.

Materials Quantity Variance

The difference between the expected quantity of materials to be used in production and the actual quantity used, calculated in terms of cost.

Standard Quantity

The expected amount or volume of a specific input or material required in the production of goods or services.

Materials Price Variance

The difference between the actual cost of materials and the expected cost based on standard pricing, used to evaluate cost management.