Bode Corporation has two divisions: East and West. Data from the most recent month appear below: The company's common fixed expenses total $47,300. If the company operates at exactly the break-even sales of the East Division and West Division, what would be the company's overall net operating income?
A)$0
B)($293,300)
C)$51,470
D)($47,300)

Question

Bode Corporation has two divisions: East and West. Data from the most recent month appear below:  The company's common fixed expenses total $47,300. If the company operates at exactly the break-even sales of the East Division and West Division, what would be the company's overall net operating income?
A)$0 
B)($293,300) 
C)$51,470 
D)($47,300)

Quizplus · Accepted Answer

Since the company is operating at exactly the break-even sales of both divisions, their total contribution margin will just cover the common fixed expenses of $47,300. Therefore, the overall net operating income would be $0. So, option A is also correct, but since option D is the closest to $0, it is the best choice.

Bode Corporation Has Two Divisions: East and West