Question

Younie Corporation has two divisions: the South Division and the West Division. The corporation's net operating income is $95,400. The South Division's divisional segment margin is $43,600 and the West Division's divisional segment margin is $174,300. What is the amount of the common fixed expense not traceable to the individual divisions?

Answer 1

The amount of the common fixed expense not traceable to the individual divisions is -$122,500.

Step-by-step explanation:

The amount of the common fixed expense not traceable to the individual divisions can be calculated by subtracting the divisional segment margins from the net operating income. Therefore, the common fixed expense can be determined by subtracting the South Division's divisional segment margin of $43,600 and the West Division's divisional segment margin of $174,300 from the net operating income of $95,400.

Common fixed expense = Net operating income - Divisional segment margin of South Division - Divisional segment margin of West Division

Common fixed expense = $95,400 - $43,600 - $174,300 = $-122,500

The amount of the common fixed expense not traceable to the individual divisions is -$122,500, which means there is a deficit in the common fixed expense.

Answer 2

$122,500

Step-by-step explanation:

Calculation for the amount of the common fixed expense not traceable to the individual divisions

First step is to calculate Total segment margin

Total segment margin = $43,600 + $174,300

Total segment margin= $217,900

Now let calculate the Common fixed expense

Common fixed expense = $217,900-$95,400

Common fixed expense $122,500

Therefore the amount of the common fixed expense not traceable to the individual divisions is $122,500