Question

Brummitt Corporation has two divisions: the BAJ Division and the CBB Division. The corporation's net operating income is $10,700. The BAJ Division's divisional segment margin is $76,100 and the CBB Division's divisional segment margin is $42,300. What is the amount of the common fixed expense not traceable to the individual divisions?

Answer 1

$107,700= common fixed expense

Step-by-step explanation:

Giving the following information:

The corporation's net operating income is $10,700. The BAJ Division's divisional segment margin is $76,100 and the CBB Division's divisional segment margin is $42,300.

The common fixed costs that can't be traced are deducted from the total contribution margin (contribution margin from each division) to calculate the net operating income.

Net operating income= Total contribution margin - common fixed expense

10,700= (76,100 + 42,300) - common fixed expense

107,700= common fixed expense