The Portland Division's operating data for the past two years is as follows: The Portland Division's margin in Year 2 was 150% of the margin for Year 1. The net operating income for Year 1 was:

Question

The Portland Division's operating data for the past two years is as follows:  The Portland Division's margin in Year 2 was 150% of the margin for Year 1. The net operating income for Year 1 was:

Quizplus · Accepted Answer

Let the margin for year 1 be x. 
The margin for year 2 is 150% of x which is 1.5x.
From the table, we know that:
Net operating income = Margin - Expenses

For year 1:
$240,000 = x - $80,000
x = $320,000

For year 2:
$600,000 = 1.5x - $150,000
$750,000 = 1.5x
x = $500,000

Therefore, the net operating income for Year 1 was $320,000 - $80,000 = $240,000. 
The correct answer is B.

The Portland Division's Operating Data for the Past Two Years