Pin Company owns 40,000 of 50,000 outstanding shares of Sum Company, and during 2011, it recognizes income from Sum as follows:

Share of Sum net income ($500,000 * 80%) .... $ 400,000

Patent amortization ....................... (50,000)

Unrealized profit—downstream sales ........ (40,000)

Unrealized profit—upstream sales ($60,000 * 80%) .. (48,000)

Income from Sum .............. $262,000

Pin’s net income for 2011 is $1,262,000, consisting of separate income from Pin of $1,000,000 and $262,000 income from Sum. Pin has 100,000 shares of common stock outstanding, but no common stock equivalents or other potentially dilutive securities.

Sum has $100,000 par of 10 percent convertible bonds outstanding that are convertible into 10,000 shares of Sum common stock. The net-of-tax interest on the bonds is $6,400, and Sum’s diluted earnings per share for purposes of computing consolidated earnings per share are determined as follows:

Net income .................. $500,000

Add: Net-of-tax interest on convertible bonds .... 6,400

Less: Unrealized profit on upstream sales ...... (60,000)

a Diluted earnings ............... $446,400

Common shares outstanding ........... 50,000

Shares issuable upon conversion of bonds ..... 10,000

b Common shares and equivalents ....... 60,000

Diluted earnings per share (a, b) ......... $ 7.44

REQUIRED: Compute Pin Company’s and consolidated diluted earnings per share for 2011.