The Operations of Smits Ltd Operating Income for Smits Ltd

Multiple Choice

The operations of Smits Ltd. are divided into the Childs Division and the Jackson Division. Projections for the next year are as follows: $\begin{array} { llll} &\text { Childs } & \text { Jackson } & \\&\text { Division } & \text { Division } & \text { Total }\\\hline \text {Sales}&£ 250,000 & £ 180,000&£ 430,000\\\text {Variable costs}&90,000 & 100,000 & 190,000\\\text {Contributi on margin}&£ 160,000 & £ 80,000 & £ 240,000\\\text {Direct fixed costs}&75,000&62,500&137,500\\\text {Segment margin}&£ 85,000&£ 17,500 &£ 102,500\\\text {Allocated common costs}&35,000 & 27,500 & 62,500\\\text {Operating income (loss) }&£ 50,000 &£(10,000) &£ 40,000\\\end{array}$ Operating income for Smits Ltd. as a whole if the Jackson Division were dropped would be

A) £22,500.
B) £40,000.
C) £50,000.
D) £60,000.