Asked by Hannah Neighbors on Jun 09, 2024
Verified
Division A reported operating income of $975,000 and total support department allocations of $675,000. As a result,
A) net income was $300,000
B) the gross profit was $300,000
C) operating income before support department allocations was $1,650,000
D) consolidated net income was $300,000
Operating Income
Earnings from a company's core business operations, excluding income from investments and after operational expenses have been deducted.
Support Department Allocations
The process of distributing the costs of support departments (such as HR and IT) to producing departments based on predetermined criteria.
Operating Income Before
An earnings before interest and taxes measure that evaluates a company's profit from operations before the impact of financing and tax expenses.
- Understand the concept of operating income, both before and after support department allocations.
- Identify how support department allocations impact a division's financial performance.
Verified Answer
Learning Objectives
- Understand the concept of operating income, both before and after support department allocations.
- Identify how support department allocations impact a division's financial performance.
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