Fernstrom Corporation has two divisions: East and West. Data from the most recent month appear below: The company's common fixed expenses total $52,140. If the company operates at exactly the break-even sales of the East Division and West Division, what would be the company's overall net operating income?
A) $0
B) ($235,140)
C) ($52,140)
D) $30,540

Question

Fernstrom Corporation has two divisions: East and West. Data from the most recent month appear below:  The company's common fixed expenses total $52,140. If the company operates at exactly the break-even sales of the East Division and West Division, what would be the company's overall net operating income?
A) $0 
B) ($235,140) 
C) ($52,140) 
D) $30,540

Quizplus · Accepted Answer

Since the company operates at exactly the break-even sales of both divisions, each division has a zero net operating income. Therefore, the overall net operating income will be equal to the common fixed expenses, which is $52,140. Thus, the correct answer is (C).

Fernstrom Corporation Has Two Divisions: East and West