The following information is available for Learning R' Us and its two divisions-Books and Periodicals: $\begin{array}{llll}&\text { Company as } & \text { Books } & \text { Periodicals } \
&\text { a whole } & \text { Division } & \text { Division }\\hline
\text { Net sales }&\$100,000&\$60,000&\$40,000\
\text { Fixed costs: }\\text { Controllable by }\
\text { division man ager } & 16,500 & 12,500 & 4,000 \
\text { Controllable by others } & 8,000 & 5,000 & 3,000 \
\text { Variable costs: } & & &\\text { Cost of merch andise sold } & 24,500 & 17,500 & 7,000 \
\text { Operating expenses } & 16,400 & 10,000 & 6,400 \
\text { Unalloc ated costs } & 1,000 & &
\end{array}$ is the net income for the Learning R' Us.
A) $33,600
B) $15,000
C) $34,600
D) $29,600

Question

Quizplus · Accepted Answer

Net income is calculated as net sales minus total costs. Total costs include fixed costs and variable costs. Fixed costs are further divided into controllable by division manager and controllable by others. Variable costs include cost of merchandise sold and operating expenses. Unallocated costs are not included in the calculation of net income.For Learning R' Us, the net income is calculated as follows:Net income = Net sales - Total costsNet income = $100,000 - ($16,500 + $8,000 + $24,500 + $16,400)Net income = $100,000 - $65,400Net income = $34,600Therefore, the correct answer is C) $34,600.

The Following Information Is Available for Learning R' Us and Its