Question

Corbel Corporation has two divisions: Division A and Division B. Last month, the company reported a contribution margin of $47,700 for Division A. Division B had a contribution margin ratio of 35% and its sales were $231,000. Net operating income for the company was $27,200 and traceable fixed expenses were $59,700. Corbel Corporation's common fixed expenses were:

A) 128, 550

B)59,700

C)101,350

D)41,650

Answer 1

Solution :

The Answer is (D) $ 41,650.

Working :

Net Operating Income = Contrbution Margin of A + Contrbution Margin of B - Traceable fixed expenses - Common fixed expenses

$ 27,200 = $ 47,700 + ($ 231,000 * 0.35) - $ 59,700 - Common fixed expenses

$ 27,200 = $ 47,700 + $ 80,850 - $ 59,700 - Common fixed expenses

$ 27,200 = $ 47,700 + $ 80,850 - $ 59,700 - Common fixed expenses

$ 27,200 = $ 68,850 - Common fixed expenses

Common fixed expenses = $ 68,850 - $ 27,200

Common fixed expenses = $ 41,650.