Maren Received 10 NQOs (Each Option Gives Her the Right

question 115

Multiple Choice

Maren received 10 NQOs (each option gives her the right to purchase 10 shares of stock for $8 per share) at the time she started working when the stock price was $6 per share. When the share price was $15 per share, she exercised all of her options. Eighteen months later she sold all of the shares for $20 per share. What is the amount of Maren's bargain element?

• A)$0
• B)$700
• C)$900
• D)$1,500
• E)None of the choices are correct.

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Definitions:

Variable Expenses

Variable expenses are costs that change in proportion with the level of activity or production volume, such as materials and labor costs.

Transfer Price

The price at which goods and services are sold between divisions within the same company, influencing the financial performance of each division.

Variable Cost

Costs that change in proportion to the level of goods or services that a business produces.

Additional Parts

Components or pieces beyond the basic requirements that are included in the manufacturing or assembly of a product.