=+7. Utilizing the stock options proposal made in this chapter, show entity and proprietary income in the following situation for the Ethan Neil Corporation:

Net income

$4,810,000 Interest expense 182,000 Stock options expense (incentive)

240,000 Income tax rate 40%

The question of the usefulness of and how to deal with fixed costs was discussed in Chapter 8 (efficient contracting), Chapter 9 (rigid unifor- mity), and this chapter (discretionary accruals and management com- pensation plans). What, if anything, would you do about (fixed) cost- allocations Don't forget to consider political costs.