Question

Koen Corporation has two divisions: Division A and Division B. Last month, the company reported a contribution margin of $43,100 for Division A. Division B had a contribution margin ratio of 35% and its sales were $285,000. Net operating income for the company was $31,600 and traceable fixed expenses were $55,200. Koen Corporation's common fixed expenses were:

$56,050
$55,200
$111,250
$142,850

Answer 1

The correct answer is $56,050.

Step-by-step explanation:

According to the scenario, the given data are as follows:

We can calculate the common fixed expense by using following formula:

Net operating income = (Contribution Margin Division A + Contribution margin Division B - Fixed expense) - common fixed expense

By putting the value, we get

$31,600 = ($43,100 + ( $285,000 × 35%) - $55,200) - common fixed expenses

So, common fixed expenses = $56,050