Answer:
c. $88,700
Explanation:
The computation of operating income for Winston Corporation is shown below:-
Particulars Dropping before Dropping after
Sales a $469,000 $383,500
($295,000 × 130%)
Variable cost b $181,000 $131,300
($101,000 × 130%)
Contribution margin $288,000 $252,200
(c = a - b)
Direct fixed cost d $160,000 $87,000
Segment margin e $128,000 $165,200
(e = c - d)
Allocated common cost f $76,500 $76,500
Operating income(loss) $51,500 $88,700
(g = d - e)
Therefore to reach the operating income(loss) we simply deduct the allocated common cost from segment margin.
