Chapter 2, Problem 30P

What does a high price-to-earnings (P/E) ratio indicate?A) The stock is undervaluedB) The stock is overvaluedC) Investors expect high growth in the futureD) The company is not profitable

Accounting Problem: Marquette Foods Ltd. had its highest total cost of $138,000 in July and its lowest total cost of $95,000 in January. The company produces a single product. The production volume was 18,500 units in July and 12,000 units in January. What is the fixed cost per month?

Coastal Electronics manufactures portable speakers. Estimated sales (in units) are 32,000 in July, 36,000 in August, and 28,500 in September. Each unit is priced at $85. Coastal wants to have 35% of the following month's sales in ending inventory. That requirement was met on July 1. Each speaker requires 2 drivers and 6 feet of cabling. Drivers cost $8 each, and cabling is $0.75 per foot. Coastal wants to have 20% of the following month's production needs in ending raw materials inventory. On July 1, Coastal had 25,000 drivers and 72,000 feet of cabling in inventory. What is Coastal's expected sales revenue for August?