Answer:
$45,000
Explanation:
Given that,
Contribution margin for Division A = $50,000
contribution margin ratio for Division B = 30%
Sales = $250,000
Net operating income = $30,000
Traceable fixed expenses = $50,000
Firstly, we are calculating the total contribution margin of the company by adding up the individual contribution margin of both the divisions.
Total contribution margin:
= Division A + Division B
= $50,000 + (30% × $250,000)
= $50,000 + $75,000
= $125,000
We are able to determine common fixed expenses by excluding the net operating income and traceable fixed expenses from the total contribution margin.
Common fixed expenses:
= Total contribution margin - Net operating income - Traceable fixed expenses
= $125,000 - $30,000 - $50,000
= $45,000
