Question

Corbel Corporation has two divisions: Division A and Division B. Last month, the company reported a contribution margin of $49,300 for Division A. Division B had a contribution margin ratio of 25% and its sales were $242,000. Net operating income for the company was $29,600 and traceable fixed expenses were $51,600. Corbel Corporation's common fixed expenses were:

Answer 1

Answer:

Common Fixed Expense is $28,600

Explanation:

Given,

Contribution of Division A = $49,300

Computing Contribution of Division B as:

Contribution = Sales × Contribution margin ratio

where

Sales is $242,000

Contribution margin ratio is 25%

So,

Contribution = $242,000 × 25%

= $60,500

Therefore, Total Contribution is :

= $49,300 + $60,500

= $109,800

Computing Income before Common Fixed Expense as:

Income before Common Fixed Expense = Total Contribution -  Traceable fixed expenses

= $109,800 - $51,600

= $58,200

Computing Common Fixed Expense as:

Common Fixed Expense = Income before Common Fixed Expense - Income after Common Fixed Expense (Net Income)

= $58,200 - $29,600

= $28,600