Question

brenner corporation has two divisions: division x and division y. last month, the company reported a contribution margin of $60,000 for division x. division y had a contribution margin ratio of 30% and its sales were $300,000. net operating income for the company was $40,000 and traceable fixed expenses were $80,000. brenner corporation's common fixed expenses were:

Answer 1

To determine Brenner Corporation's common fixed expenses, the contribution margins of both divisions are combined, and the traceable fixed expenses and net operating income are subtracted from this total. The calculation reveals that the common fixed expenses are $30,000.

Step-by-step explanation:

The student is asking about the calculation of common fixed expenses in a scenario involving two divisions of a corporation. To find the common fixed expenses of Brenner Corporation, we use the following data: Division X's contribution margin is $60,000, Division Y has a contribution margin ratio of 30% with sales of $300,000, the company's net operating income is $40,000, and the traceable fixed expenses are $80,000.

First, we calculate Division Y's contribution margin:

• Sales for Division Y = $300,000.
• Contribution margin ratio for Division Y = 30%.
• Contribution margin for Division Y = Sales × Contribution margin ratio = $300,000 × 0.30 = $90,000.

Next, we calculate the total contribution margin for the company:

• Total contribution margin = Contribution margin of X + Contribution margin of Y = $60,000 + $90,000 = $150,000.

Finally, we can determine the common fixed expenses by rearranging the income statement formula:

Net operating income = Total contribution margin - Traceable fixed expenses - Common fixed expensesCommon fixed expenses = Total contribution margin - Traceable fixed expenses - Net operating income

Common fixed expenses = $150,000 - $80,000 - $40,000

= $30,000.

Therefore, Brenner Corporation's common fixed expenses were $30,000.