J Corporation has two divisions. Division A has a contribution margin of $79,300 and Division B has a contribution margin of $126,200. If total traceable fixed expenses are $72,400 and total common fixed expenses are $34,900, what is J Corporation's net operating income?
A) $168,000
B) $170,600
C) $133,100
D) $98,200

Question

Quizplus · Accepted Answer

Net operating income is calculated by subtracting total traceable fixed expenses and total common fixed expenses from the total contribution margin of both divisions. The total contribution margin is $79,300 + $126,200 = $205,500. Subtracting the total traceable fixed expenses ($72,400) and total common fixed expenses ($34,900) gives $205,500 - $72,400 - $34,900 = $98,200.

J Corporation Has Two Divisions