Jemmott Corporation has two divisions: Western Division and Eastern Division. The following report is for the most recent operating period: The common fixed expenses have been allocated to the divisions on the basis of sales.
What is the company's overall net operating income if it operates at the break-even points for its two divisions?
A) $34,100
B) $0
C) $(69,020)
D) $(260,020)

Question

Jemmott Corporation has two divisions: Western Division and Eastern Division. The following report is for the most recent operating period:  The common fixed expenses have been allocated to the divisions on the basis of sales.
What is the company's overall net operating income if it operates at the break-even points for its two divisions?
A) $34,100 
B) $0 
C) $(69,020) 
D) $(260,020)

Quizplus · Accepted Answer

If the company operates at the break-even points for its two divisions, it will not cover its common fixed expense of $69,020.

Jemmott Corporation Has Two Divisions: Western Division and Eastern Division