Question

Miscavage Corporation has two divisions: the Beta Division and the Alpha Division. The Beta Division has sales of $265,000, variable expenses of $141,600, and traceable fixed expenses of $66,800. The Alpha Division has sales of $575,000, variable expenses of $321,800, and traceable fixed expenses of $126,300. The total amount of common fixed expenses not traceable to the individual divisions is $126,200. What is the company's net operating income

Answer 1

The company's net operating income is calculated by subtracting total variable expenses, total traceable fixed expenses, and common fixed expenses from total sales, resulting in a net operating income of $57,300.

Step-by-step explanation:

To calculate the company's net operating income, we need to subtract the total expenses (which include variable, traceable fixed, and common fixed expenses) from the total sales of both divisions.

• Sales for Beta Division: $265,000
• Sales for Alpha Division: $575,000
• Total Sales: $265,000 + $575,000 = $840,000
• Total Variable Expenses: $141,600 (Beta) + $321,800 (Alpha) = $463,400
• Total Traceable Fixed Expenses: $66,800 (Beta) + $126,300 (Alpha) = $193,100
• Common Fixed Expenses: $126,200
• Net Operating Income: $840,000 (Total Sales) - $463,400 (Total Variable Expenses) - $193,100 (Total Traceable Fixed Expenses) - $126,200 (Common Fixed Expenses) = $57,300

The company's net operating income is $57,300.

Answer 2

$57,300

Step-by-step explanation:

Calculation to determine the company's net operating income

Sales $840,000

($265,000+$575,000)

Less Variable expenses $463,400

($141,600+$321,800)

Contribution margin $376,600

($840,000-$463,400)

Less Traceable fixed expenses $193,100

($66,800+$126,300)

Divisional segment margin $183,500

Less Common fixed expenses $126,200

Net Operating Income $57,300

Therefore the company's net operating income will be $57,300