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