Branded Shoe Company Manufactures Only One Type of Shoe and Has

question 37

Multiple Choice

Branded Shoe Company manufactures only one type of shoe and has two divisions, the Stitching Division and the Polishing Division. The Stitching Division manufactures shoes for the Polishing Division, which completes the shoes and sells them to retailers. The Stitching Division "sells" shoes to the Polishing Division. The market price for the Polishing Division to purchase a pair of shoes is $42. (Ignore changes in inventory.) The fixed costs for the Stitching Division are assumed to be the same over the range of 40,000-101,000 units. The fixed costs for the Polishing Division are assumed to be $23 per pair at 101,000 units.

If the Polishing Division sells 101,000 pairs of shoes at a price of $180 a pair to customers, what is the operating income of both divisions together?

• A) $12,221,000
• B) $9,595,000
• C) $7,878,000
• D) $6,363,000

---

Definitions:

Solomon Asch

A psychologist best known for his research on conformity, demonstrating how social pressure can influence individuals to conform to incorrect answers.

Conformity Studies

Research focused on how and why individuals conform to the behaviors, attitudes, and values of a group or society.

Deindividuation

A psychological state where an individual loses self-awareness and self-restraint, often occurring in group settings.

Uniforms

Standardized clothing worn by members of an organization while participating in that organization's activity.