Income from operations of the Commercial Aviation Division is $2,225,000. If income from operations before service department charges is $3,250,000:
A) operating expenses are $1,025,000
B) total service department charges are $1,025,000
C) noncontrollable charges are $1,025,000
D) direct manufacturing charges are $1,025,000

Question

Quizplus · Accepted Answer

The difference between income from operations before service department charges ($3,250,000) and income from operations of the Commercial Aviation Division ($2,225,000) is equal to the total service department charges. Therefore, total service department charges are $1,025,000 (Option B). The other options are not relevant to finding the total service department charges.

Income from Operations of the Commercial Aviation Division Is $2,225,000