Miscavage Corporation has two divisions: the Beta Division and the Alpha Division. The Beta Division has sales of $320,000, variable expenses of $158,100, and traceable fixed expenses of $72,300. The Alpha Division has sales of $630,000, variable expenses of $343,800, and traceable fixed expenses of $135,100. The total amount of common fixed expenses not traceable to the individual divisions is $137,200. What is the company's net operating income?

To calculate the company's net operating income (NOI), we need to perform the following steps:

1. **Calculate the contribution margin for each division:**
   Contribution margin = Sales - Variable expenses

   - **Beta Division:**
     \[
     \text{Contribution Margin (Beta)} = 320,000 - 158,100 = 161,900
     \]
   - **Alpha Division:**
     \[
     \text{Contribution Margin (Alpha)} = 630,000 - 343,800 = 286,200
     \]

2. **Subtract traceable fixed expenses from the contribution margin for each division to get the segment margin:**
   Segment margin = Contribution margin - Traceable fixed expenses

   - **Beta Division:**
     \[
     \text{Segment Margin (Beta)} = 161,900 - 72,300 = 89,600
     \]
   - **Alpha Division:**
     \[
     \text{Segment Margin (Alpha)} = 286,200 - 135,100 = 151,100
     \]

3. **Add the segment margins for both divisions to get the total segment margin:**
   \[
   \text{Total Segment Margin} = 89,600 + 151,100 = 240,700
   \]

4. **Subtract the common fixed expenses from the total segment margin to calculate the company's net operating income:**
   \[
   \text{Net Operating Income (NOI)} = 240,700 - 137,200 = 103,500
   \]

Thus, the company's **net operating income** is **$103,500**.

Would you like further details on any part of this solution or have additional questions?

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Here are 5 questions that expand on the problem:

1. How would the net operating income change if the variable expenses for the Beta Division increased by 10%?
2. What would the impact be on the net operating income if common fixed expenses increased by $20,000?
3. How does the concept of contribution margin help in assessing the profitability of each division?
4. How would the analysis change if the traceable fixed expenses for the Alpha Division were incorrectly reported?
5. How would allocating the common fixed expenses between divisions affect the segment margin?

**Tip:** Always separate traceable fixed expenses from common fixed expenses to maintain a clear understanding of each division's contribution to overall profitability.

Learn how to calculate the net operating income for Miscavage Corporation using contribution margin and segment margin. This problem includes the financial data for the Beta and Alpha divisions, covering sales, variable expenses, and fixed costs. Suitable for students in Grades 11-12.

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