Question

two divisions: the Beta Division and the Alpha Division. The Beta Division has sales of $235,000, variable expenses of $132,600, a traceable fixed expenses of $63,800. The Alpha Division has sales of $545,000, variable expenses of $309,800, an traceable fixed expenses of $121,500. The total amount of common fixed expenses not traceable to the individual divisions is $120,200. What is the company's net operating income

Answer 1

Net operating income $32,100

Step-by-step explanation:

The sum of the the two divisions sales and expenses would be the the reported figures for the entire company. The net operating income would be computed as follows

$

Total sales ($235,000 + $545,000) 780,000

Variables expenses (132,600 +309,800) (442,400)

Contribution 337,600

Traceable fixed expenses(63,800+ 121,500) (185,300 )

Common fixed expenses (120,200)

Net operating income 32,100

Answer 2

$ 32,100

Step-by-step explanation:

company's net operating income = Beta Division Controllable Profit + Alpha Division Controllable Profit - Common fixed expenses not traceable

Beta Division Controllable Profit = ($235,000-$132,600-$63,800)

= $38,600

Alpha Division Controllable Profit = ($545,000-$309,800-$121,500)

= $113,700

therefore,

company's net operating income = $38,600 + $113,700 - $120,200

= $ 32,100