This answer is the contribution controllable by the divisional manager, but net operating income contributed is found by subtracting out the fixed allocated costs (controllable by others) as well.
This is Division 1's net revenue minus its variable manufacturing costs. However, all direct and allocated divisional costs need to be subtracted.
This is the contribution margin, but the question is asking for net operating income contributed by the division, so we need to subtract out all costs allocated to division.
This question is asking for the net operating income contributed by Division 1, so we need to subtract all direct costs of the division and costs allocated to it. Revenue of $600,000 minus total variable costs (manufacturing and S&A) of $290,000 minus controllable fixed costs of $50,000 minus fixed cost controllable by others of $70,000 equals $190,000.
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Using the information presented above, the net operating income contributed to the company by Division 1 was
