Miscavage Corporation has two divisions: the Beta Division and the Alpha Division. The Beta Division has sales of $580,000, variable expenses of $301,600, and traceable fixed expenses of $186,500. The Alpha Division has sales of $510,000, variable expenses of $178,500, and traceable fixed expenses of $222,100. The total amount of common fixed expenses not traceable to the individual divisions is $235,500. What is the company's net operating income?
A) $374,400
B) $201,300
C) $609,900
D) ($34,200)

Question

Quizplus · Accepted Answer

The net operating income is calculated by subtracting total expenses (variable, traceable fixed, and common fixed) from total sales. The Beta Division's contribution margin is $278,400 ($580,000 - $301,600), and the Alpha Division's contribution margin is $331,500 ($510,000 - $178,500). Subtracting the traceable fixed expenses ($186,500 + $222,100) and common fixed expenses ($235,500) from the total contribution margin ($278,400 + $331,500) results in a net operating income of ($34,200).

Miscavage Corporation Has Two Divisions: the Beta Division and the Alpha