Answer:
$69,000
Explanation:
West division:
Sales (S) = $200,000
Salary expense (E) = $26,000
Cost of goods sold (C) = $80,000
Proportional Rent (R) = $40,000 % of square footage
Area of the division = 5,000 square ft
Total Area = 8,000 square ft
The operating income (I) for the West Division is given by the amount of sales subtracted by salary expenses, cost of goods sold and rent:
[tex]I = S-E-C-R\\I = 200,000 - 26,000 - 80,000 - (40,000*\frac{5,000}{8,000})\\I=\$69,000[/tex]
The yearly operating income for Fallow Corporation's West Division is $69,000
