Redding Company has two divisions with the following segment margins for the current year: Northern,$200,000; Southern,$400,000.Common expenses of the company are $50,000.What is Redding Company's net income?
A)$150,000
B)$550,000
C)$600,000
D)$650,000

Question

Quizplus · Accepted Answer

To calculate the net income of the company, we need to subtract the common expenses from the total segment margin generated by both divisions. 
Total Segment Margin = $200,000 (Northern) + $400,000 (Southern) = $600,000
Net Income = Total Segment Margin - Common Expenses = $600,000 - $50,000 = $550,000. 
Therefore, the correct option is B.

Redding Company Has Two Divisions with the Following Segment Margins