Campion Company has two divisions, A and B. The following data pertain to operations in May:

If common fixed expenses were $10,000, total fixed expenses were:
A) $10,000
B) $30,500
C) $40,500
D) $65,500

Question

Campion Company has two divisions, A and B. The following data pertain to operations in May:

If common fixed expenses were $10,000, total fixed expenses were:
A) $10,000 
B) $30,500 
C) $40,500 
D) $65,500

Quizplus · Accepted Answer

Total fixed expenses can be calculated by adding the fixed expenses for both divisions. Fixed expenses for Division A are $20,000 and for Division B are $30,500, which adds up to $50,500. Since $10,000 is common to both divisions, it should not be counted twice. Therefore, the total fixed expenses are $40,500 (=$50,500-$10,000).

Campion Company Has Two Divisions, a and B