Cara Company
Cara Company has the following information pertaining to its two divisions for the current year: $\begin{array}{lrr}&\text { european division}&\text { american division}\
\text { Variable selling and administrative expenses } & \$ 40,000 & \$ 55,000 \
\text { Direct fixed manufacturing expenses } & 22,000 & 60,000 \
\text { Sales } & 120,000 & 220,000 \
\text { Direct fixed selling and administrative expenses } & 18,000 & 45,000 \
\text { Wariable manufacturing expenses } & 25,000 & 55,000
\end{array}$ Common expenses are $18,000 for the current year.
-Refer to Cara Company. What is the net income for Cara Company?
A) $2,000
B) $32,500
C) $150,000
D) $300,000

Question

Quizplus · Accepted Answer

To find the net income, calculate the total expenses for each division and subtract from total sales. Total expenses for European division: $40,000 + $22,000 + $18,000 + $25,000 = $105,000. Total expenses for American division: $55,000 + $60,000 + $45,000 + $55,000 = $215,000. Total sales: $120,000 + $220,000 = $340,000. Total expenses: $105,000 + $215,000 + $18,000 (common expenses) = $338,000. Net income = $340,000 - $338,000 = $2,000.

Cara Company Cara Company Has the Following Information Pertaining to Its

Cara Company
Cara Company Has the Following Information Pertaining to Its