Miscavage Corporation has two divisions: the Beta Division and the Alpha Division. The Beta Division has sales of $285,000, variable expenses of $147,600, and traceable fixed expenses of $68,800. The Alpha Division has sales of $595,000, variable expenses of $329,800, and traceable fixed expenses of $129,500. The total amount of common fixed expenses not traceable to the individual divisions is $130,200. What is the company's net operating income?

A) $204,300
B) $402,600
C) $74,100
D) $265,200

Question

Tarik Takhi · Accepted Answer

Final Answer : C, Explanation :  The net operating income is calculated by subtracting total expenses (variable, traceable fixed, and common fixed) from total sales. For Beta Division: Contribution Margin = $285,000 - $147,600 = $137,400; Segment Margin = $137,400 - $68,800 = $68,600. For Alpha Division: Contribution Margin = $595,000 - $329,800 = $265,200; Segment Margin = $265,200 - $129,500 = $135,700. Total Segment Margin = $68,600 + $135,700 = $204,300. Net Operating Income = $204,300 - $130,200 (common fixed expenses) = $74,100.

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