Fernstrom Corporation has two divisions: East and West. Data from the most recent month appear below: East West Sales $ 330,000 $ 144,000 Variable expenses $ 132,000 $ 76,320 Traceable fixed expenses $ 140,000 $ 43,000 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?

Question

Business

Mike Morrow

5 June, 02:02

Fernstrom Corporation has two divisions: East and West. Data from the most recent month appear below: East West Sales $ 330,000 $ 144,000 Variable expenses $ 132,000 $ 76,320 Traceable fixed expenses $ 140,000 $ 43,000 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?

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Answers (1)

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Rachael Walter · Answer 1

($52,140)

Explanation:

Since in the question, it is mentioned that the company operates at break-even sales which means that there will be no profit or no loss for the particular period.

In mathematically, Break-even level means

Total Sales value = Total cost

where,

Total cost includes both variable cost and fixed cost.

If the company incurred any additional fixed expenses, the same is presented while computing the net operating income

So, the net operating income would be ($52,140)