Question

Dukelow Corporation has two divisions: the Governmental Products Division and the Export Products Division. The Governmental Products Division's divisional segment margin is $43,800 and the Export Products Division's divisional segment margin is $96,200. The total amount of common fixed expenses not traceable to the individual divisions is $110,800.

Required:
1. What is the company's net operating income (loss)?

Answer 1

$29,200

Step-by-step explanation:

The difference between the contribution margin (which is a difference between sales and variable cost) and the total fixed cost gives the net operating income.

The total contribution margin is the sum of the individual margins from the departments.

Total contribution margin = $43,800 + $96,200

= $140,000

The company's net operating income (loss)

= $140,000 - $110,800

= $29,200