Question

Dukelow Corporation has two divisions: the Governmental Products Division and the Export Products Division. The Governmental Products Division's divisional segment margin is $42,300 and the Export Products Division's divisional segment margin is $94,700. The total amount of common fixed expenses not traceable to the individual divisions is $108,400.
What is the company's net operating income (loss)?

Answer 1

Answer:

$28,600

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 net operating income/loss is the difference between the sales and the total costs.

The company's net operating income (loss)

= $42,300 + $94,700 -  $108,400

= $28,600