Nauman Company has the following information pertaining to its two divisions for the current year: $\begin{array}{lrr}
&\text { Division } X&\text { Division } Y\
\text { Variable selling and admin. expenses } & \$ 70,000 & \$ 90,000 \
\text { Direct fixed manufacturing expenses } & 35,000 & 100,000 \
\text { Sales } & 200,000 & 400,000 \
\text { Direct fixed selling and admin. expenses } & 30,000 & 70,000 \
\text { Variable manufacturing expenses } & 40,000 & 100,000
\end{array}$ Common expenses are $24,000 for the current year.
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What is the net income for Nauman Company?

Question

Nauman Company has the following information pertaining to its two divisions for the current year: $\begin{array}{lrr}
&\text { Division } X&\text { Division } Y\
\text { Variable selling and admin. expenses } & \$ 70,000 & \$ 90,000 \
\text { Direct fixed manufacturing expenses } & 35,000 & 100,000 \
\text { Sales } & 200,000 & 400,000 \
\text { Direct fixed selling and admin. expenses } & 30,000 & 70,000 \
\text { Variable manufacturing expenses } & 40,000 & 100,000
\end{array}$   Common expenses are $24,000 for the current year.
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What is the net income for Nauman Company?

Quizplus · Accepted Answer

To calculate the net income, subtract all expenses from sales for both divisions and then subtract common expenses:  Division X: Sales - (Variable selling/admin + Direct fixed manufacturing + Direct fixed selling/admin + Variable manufacturing) = $200,000 - ($70,000 + $35,000 + $30,000 + $40,000) = $25,000  Division Y: Sales - (Variable selling/admin + Direct fixed manufacturing + Direct fixed selling/admin + Variable manufacturing) = $400,000 - ($90,000 + $100,000 + $70,000 + $100,000) = $40,000  Total income before common expenses = $25,000 + $40,000 = $65,000  Net income = $65,000 - $24,000 (common expenses) = $41,000.

Nauman Company Has the Following Information Pertaining to Its Two