Normandy Company has the following information pertaining to its two divisions for 2018: $$\begin{array} { l r r }
& \text { Division } \mathrm { X } & \text { Division } Y \
\text { Variable selling and admin. expenses } & \$ 70,000 & \$ 90,000 \
\text { Direct fixed manufacturing expenses } & 35,000 & 100,000 \
\text { Sales } & 200,000 & 400,000 \
\text { Direct fixed selling and admin. expenses } & 30,000 & 70,000 \
\text { Variable manufacturing expenses } & 40,000 & 100,000
\end{array}$$ Common expenses are $24,000 for 2018. What is the operating income for Normandy Company?
A)$65,000
B)$325,000
C)$41,000
D)$300,000

Question

Normandy Company has the following information pertaining to its two divisions for 2018: $$\begin{array} { l r r } 
& \text { Division } \mathrm { X } & \text { Division } Y \
\text { Variable selling and admin. expenses } & \$ 70,000 & \$ 90,000 \
\text { Direct fixed manufacturing expenses } & 35,000 & 100,000 \
\text { Sales } & 200,000 & 400,000 \
\text { Direct fixed selling and admin. expenses } & 30,000 & 70,000 \
\text { Variable manufacturing expenses } & 40,000 & 100,000
\end{array}$$ Common expenses are $24,000 for 2018. What is the operating income for Normandy Company?
A)$65,000
B)$325,000
C)$41,000
D)$300,000

Quizplus · Accepted Answer

To calculate the operating income for Normandy Company, we need to sum up the sales and subtract all the expenses (variable and fixed, both manufacturing and selling & admin, including common expenses) for both divisions. For Division X:- Sales: $200,000- Total expenses: $70,000 (Variable selling and admin) + $35,000 (Direct fixed manufacturing) + $30,000 (Direct fixed selling and admin) + $40,000 (Variable manufacturing) = $175,000For Division Y:- Sales: $400,000- Total expenses: $90,000 (Variable selling and admin) + $100,000 (Direct fixed manufacturing) + $70,000 (Direct fixed selling and admin) + $100,000 (Variable manufacturing) = $360,000Combined sales for both divisions: $200,000 (X) + $400,000 (Y) = $600,000Combined expenses for both divisions: $175,000 (X) + $360,000 (Y) = $535,000Adding common expenses: $535,000 + $24,000 = $559,000Operating income = Total sales - Total expenses = $600,000 - $559,000 = $41,000

Normandy Company Has the Following Information Pertaining to Its Two