A 6-Month Call Option on Meyers Inc

question 2

Multiple Choice

A 6-month call option on Meyers Inc.'s stock has a strike price of $45 and sells in the market for $8.25.Meyers' current stock price is $48.What is the option premium?

• A)$4.25
• B)$4.73
• C)$5.25
• D)$5.78
• E)$6.35

---

Definitions:

Budgeted Overhead Cost

An estimate of the total indirect costs or overheads expected to be incurred during a specified budget period.

Activity Rates

Charges or costs associated with specific business activities, used in costing and budgeting.

Activity Levels

Various stages of business operations ranging from high to low, impacting costs and revenues.

Activity-Based Costing (ABC)

A costing method that assigns overhead and indirect costs to related products and services based on the activities that drive those costs.