Sales in North Corporation increased from $60,000 per year to $63,000 per year while net operating income increased from $10,000

Solution – Division A

Explanation:

Last year's data shows that Division A contributed 60% of total revenue.

Let total revenue for the company last year be x.

Therefore, Division A earned 0.6x.

Similarly, Division B generated 40% of total revenue last year.

This means Division B’s income was 0.4x.

For the current year, Division A’s earnings have dropped by 35%.

Since last year was 0.6x, the amount lost is 35% of 0.6x.

So this year’s revenue: 0.6x - 0.35(0.6x) = (1 - 0.35) * 0.6x = 0.65 * 0.6x = 0.39x.

Division B’s revenue declined by 5% this year.

Last year’s revenue was 0.4x, so this year it is 0.4x - 0.05(0.4x) = 0.95 * 0.4x = 0.38x.

Comparing both, Division A’s revenue (0.39x) exceeds Division B’s (0.38x) this year.