Gunderman Corporation has two divisions: the Alpha Division and the Charlie Division. The Alpha Division has sales of $230,000, variable expenses of $131,100, and traceable fixed expenses of $63,300. The Charlie Division has sales of $540,000, variable expenses of $307,800, and traceable fixed expenses of $120,700. The total amount of common fixed expenses not traceable to the individual divisions is $119,200. What is the company's net operating income?
A)$147,100
B)$331,100
C)$27,900
D)$211,900

Question

Quizplus · Accepted Answer

The net operating income is calculated by subtracting total expenses (variable, traceable fixed, and common fixed) from total sales. The Alpha Division's contribution margin is $98,900 ($230,000 - $131,100), and the Charlie Division's is $232,200 ($540,000 - $307,800). Subtracting traceable fixed expenses ($63,300 + $120,700) and common fixed expenses ($119,200) from the total contribution margin ($331,100) gives a net operating income of $27,900.

Gunderman Corporation Has Two Divisions: the Alpha Division and the Charlie