Branded Shoe Company Manufactures Only One Type of Shoe and Has

question 149

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 $51. (Ignore changes in inventory.) The fixed costs for the Stitching Division are assumed to be the same over the range of 40,000-110,000 units. The fixed costs for the Polishing Division are assumed to be $20 per pair at 110,000 units.

Assume the transfer price for a pair of shoes is 185% of total costs of the Stitching Division and 40,000 of shoes are produced and transferred to the Polishing Division. The Stitching Division's operating income is ________.

• A) $1,632,000
• B) $1,120,000
• C) $1,400,000
• D) $1,320,000

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Definitions:

Private Ownership

The legal right of individuals or entities to own property and assets, allowing for control and use as deemed fit by the owner.

Atomized Society

A social condition characterized by a lack of connection and solidarity among individuals, leading to isolation and fragmentation of relationships.

Surveillance Society

A society in which the monitoring and collection of data about individuals is pervasive, often by governments or corporations, for various purposes.

Laissez-Faire Society

A society where transactions between private parties are free from state intervention, including restrictive regulations, taxes, tariffs, and enforced monopolies.