Question

Uchimura Corporation has two divisions: the AFE Division and the GBI Division. The corporation's net operating income is $12,700. The AFE Division's divisional segment margin is $86,100 and the GBI Division's divisional segment margin is $50,300. What is the amount of the common fixed expense not traceable to the individual divisions?

Answer 1

Answer:

$123,700

Explanation:

Calculation for the amount of the common fixed expense not traceable to the individual divisions

Using this formula

Common fixed expense not traceable= Total segment margin - Net operating income

Where,

Total segment margin =($86,100 +$50,300)

Net operating income=$12,700

Let plug in the formula

Common fixed expense not traceable= (86,100+50,300) - 12,700

Common fixed expense not traceable= 136,400 - 12,700

Common fixed expense not traceable

= 123,700

Therefore the amount of the common fixed expense not traceable to the individual divisions will be $123,700