Question

Miscavage Corporation has two divisions: the Beta Division and the Alpha Division. The Beta Division has sales of $310,000, variable expenses of $155,100, and traceable fixed expenses of $71,300. The Alpha Division has sales of $620,000, variable expenses of $339,800, and traceable fixed expenses of $133,500.
The total amount of common fixed expenses not traceable to the individual divisions is $135,200.
What is the company's net operating income?

Answer 1

Answer:

The correct answer is $95,100.

Explanation:

According to the scenario, the computation of the given data are as follows,

We can calculate the net operating income by using following formula:

Net operating income = ( Beta margin + Alpha margin) - Non traceable fixed expense

Where, Beta margin = Sales - variable expense - traceable fixed expense

= $310,000 - $155,100 - $71,300

= $83,600

And, Alpha margin = Sales - variable expense - traceable fixed expense

= $620,000 - $339,800 - $133,500

= $146,700

So, by putting the value in formula, we get

Net operating expense = ( $83,600 + $146,700 ) - $135,200

= $230,300 - $135,200

= $95,100