If the Polishing Division Sells 100,000 Pairs of Shoes at a Price

question 50

Multiple Choice

If the Polishing Division sells 100,000 pairs of shoes at a price of $120 a pair to customers,what is the operating income of both divisions together?

• A) $8,800,000
• B) $6,800,000
• C) $6,000,000
• D) $5,200,000

---

Definitions:

Preemptive Rights

Rights that allow existing shareholders to purchase additional shares before new shares are offered to the public, to maintain their proportionate ownership in the company.

Rights Offering

A corporate event in which a company offers existing shareholders the opportunity to buy additional shares directly from the company at a discounted price, typically to raise capital.

Subscription Agreement

A contract between a company and investors for the purchase of shares in a private placement.

Dilution

The reduction in existing shareholders' ownership percentage of a company due to the issue of new shares.