Response to the following problem:
Canon Company has two sales areas: North and South. During last year, the contribution margin in the North Area was $50,000, or 20% of sales. The segment margin in the South was $15,000, or 8% of sales. Traceable fixed expenses are $15,000 in the North and $10,000 in the South. During last year, the company reported total net operating income of $26,000.
The variable expenses for the South Area for the year were:
A) $230,000
B) $185,000
C) $162,500
D) $65,000
Show all work and calculations.