Question

Younie Corporation has two divisions: the South Division and the West Division. The corporation's net operating income is $90,100. The South Division's divisional segment margin is $48,800 and the West Division's divisional segment margin is $168,500. What is the amount of the common fixed expense not traceable to the individual divisions?a. $217,300b. $127,200c. $138,900

Answer 1

b. $127,200

Step-by-step explanation:

Both sales and variable cost are dependent on the number of units sold.

The sales less the variable cost gives the contribution margin. The contribution margin less the fixed cost gives the net operating income.

As such, the total fixed cost of the corporation not traceable to the individual divisions

= $168,500 + $48,800 - $90,100

= $127,200