Question

Dukelow Corporation has two divisions: the Governmental Products Division and the Export Products Division. The Governmental Products Division's divisional segment margin is $35,800 and the Export Products Division's divisional segment margin is $88,200. The total amount of common fixed expenses not traceable to the individual divisions is $98,000. What is the company's net operating income foss)? Multiple Choice O $222,000 O $124,000 o Oo oo О $26,000 15124,000)

Answer 1

Question 1: Calculate company's net operating income as follows: Governmental products division's divisional segment margin Exposrt products division's divisional segment margin Total divisional segment margin ($35,800 + $88,200) Less: Common fixed expenses not traceable to individual divisions Company's net operating income ($124,000 - $98,000) $35,800 $88.200 $124,000 -$98.000 $26,000 Therefore, company's net operating income is $26,000. Question 2: Calculate break-even in sales dollar for Alpha division as follows: Particulars Sales Less: Variable expense Contribution margin ($219,000 - $133,590) Contribution margin ratio (585,410 = $219,000) Traceable fixed expenses Break-even in sales dollar ($97,020 = 39%) Alpha divison $219.000 -$133,590 $85.410 39.0% $97,020 $248,769 Therefore, break-even in sales dollar for Alpha division is $248,769.