Corbel Corporation has two divisions: Division A and Division B. Last month, the company reported a contribution margin of $60,000 for Division A. Division B had a contribution margin ratio of 40% and its sales were $300,000. Net operating income for the company was $40,000 and traceable fixed expenses were $80,000. Corbel Corporation's common fixed expenses were:
A) $140,000
B) $60,000
C) $100,000
D) $80,000

Question

Quizplus · Accepted Answer

Division B's contribution margin is calculated as 40% of $300,000, which equals $120,000. Adding Division A's contribution margin of $60,000 gives a total contribution margin of $180,000 for the company. Subtracting the traceable fixed expenses ($80,000) and the net operating income ($40,000) from the total contribution margin ($180,000) gives the common fixed expenses: $180,000 - $80,000 - $40,000 = $60,000.

Corbel Corporation Has Two Divisions: Division a and Division B