CCC Inc. operates two separate divisions. The admissions department produces revenues of $50,000 per year with a cost of service of $12,000. The company also incurs the following centralized operating costs: All support costs are allocated between the two divisions. Based on the accountant's calculation, the admission department's share of support costs is $4,000. How much will CCC report for a gross margin and operating income for the admissions department?
A)$38,000, $34,000.
B)$38,000, $24,500.
C)$50,000, $34,000.
D)$50,000, $24,500.

Question

CCC Inc. operates two separate divisions. The admissions department produces revenues of $50,000 per year with a cost of service of $12,000. The company also incurs the following centralized operating costs:  All support costs are allocated between the two divisions. Based on the accountant's calculation, the admission department's share of support costs is $4,000. How much will CCC report for a gross margin and operating income for the admissions department?
A)$38,000, $34,000. 
B)$38,000, $24,500. 
C)$50,000, $34,000. 
D)$50,000, $24,500.

Quizplus · Accepted Answer

$50,000 - $12,000 = $38,000
$38,000 - $4,000 = $34,000 
Rev - cost = gr margin 
Gr margin - sup cost = op inc.

CCC Inc Operates Two Separate Divisions