Sarandon Company has the following information pertaining to its two divisions for 2018: $\begin{array}{lrr}&\text { Division } A & \text { Division } B\
\text { Variable selling and admin. expenses } & \$ 35,000 & \$ 45,000 \
\text { Direct fixed manufacturing expenses } & 17,500 & 50,000 \
\text { Sales } & 100,000 & 200,000 \
\text { Direct fixed selling and admin. expenses } & 15,000 & 35,000 \
\text { Variable manufacturing expenses } & 20,000 & 50,000
\end{array}$ Common expenses are $12,000 for 2018.
What is the operating income for Sarandon Company?
A)$300,000
B)$32,500
C)$150,000
D)$20,500

Question

Quizplus · Accepted Answer

To calculate the operating income for Sarandon Company, we need to sum up all the revenues and subtract all the expenses. For both divisions combined, the total sales (revenues) are $100,000 + $200,000 = $300,000. The total expenses include variable selling and admin expenses ($35,000 + $45,000), direct fixed manufacturing expenses ($17,500 + $50,000), direct fixed selling and admin expenses ($15,000 + $35,000), variable manufacturing expenses ($20,000 + $50,000), and common expenses ($12,000). Summing up all expenses gives us $279,500. Subtracting the total expenses from the total revenues gives us an operating income of $300,000 - $279,500 = $20,500.

Sarandon Company Has the Following Information Pertaining to Its Two