Question

Younie Corporation has two divisions: the South Division and the West Division. The corporation's net operating income is $90,400. The South Division's divisional segment margin is $35,700 and the West Division's divisional segment margin is $174,700. What is the amount of the common fixed expense not traceable to the individual divisions?

Answer 1

$120,000

Step-by-step explanation:

The computation of the common fixed expense not traceable to the individual divisions is shown below:

= Divisional segment margin - Net operating income

where,

Divisional segment margin is

= $35,700 + $174,700

= $210,400

And, the net operating income is $90,400

So, the amount of common fixed expense not traceable is

= $210,400 - $90,400

= $120,000

We simply applied the above formula