The operations of Superior Corporation are divided into the Northrup Division an
ID: 2421888 • Letter: T
Question
The operations of Superior Corporation are divided into the Northrup Division and the Hawley Division. Projections for the next year are as follows:
Northrup
Division
Hawley
Division
Operating income for Superior Corporation, as a whole, if the Hawley Division were dropped would be
A. $151,500
B. $52,000
C. $128,000
D. $104,500
Northrup
Division
Hawley
Division
Total Sales $570,000 $430,000 $1,000,000 Less Variable costs 197,500 235,000 432,500 Contribution margin $372,500 $195,000 $567,500 Less Direct fixed costs 160,500 142,500 303,000 Segment margin $212,000 $52,500 $264,500 Less Allocated common costs 84,000 76,000 160,000 Operating Income (loss) $128,000 $(23,500) $104,500Explanation / Answer
Answer : Answer 'B' is correct i.e. $ 52000.
If Hawley division Dropped, Net operating Income will be
Operating Income from Northrup Division 128000
Less : Allocated common cost of Hawley division 76000
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Net operating Income 52000
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