Question

The operations of Erin Corporation are divided into the Coral Division and the Cyan Division. Projections for the next year are as follows: Coral Cyan Division Division Total Sales $215,000 $126,000 $341,000 Variable costs 75,500 55,000 130,500 Contribution margin $139,500 $ 71,000 $210,500 Direct fixed costs 60,000 50,000 110,000 Segment margin $ 79,500 $ 21,000 $100,500 Allocated common costs 32,000 40,000 72,000 Operating income (loss) $ 47,500 $(19,000) $ 28,500 Operating income for Erin Corporation as a whole if the Cyan Division were dropped would be:

Answer 1

$7,500

Step-by-step explanation:

The computation of the Operating income for Erin Corporation if Cyan Division were dropped is

Operating income coral division $47,500

Less: Operating income (loss) From cyan division -$40,000

Operating income for Erin corporation $7,500

By deducting the operating income or loss of cyan division from the operating income of coral division we can get the operating income and the same is shown above