Stryker Corporation has two major business segments-East and West. In April, the

Question

Stryker Corporation has two major business segments-East and West. In April, the East business segment had sales revenues of $500,000, variable expenses of $280,000, and traceable fixed expenses of $80,000. During the same month, the West business segment had sales revenues of $970,000, variable expenses of $514,000, and traceable fixed expenses of $184,000. The common fixed expenses totaled $280,000 and were allocated as follows: $112,000 to the East business segment and $168,000 to the West business segment.

The contribution margin of the West business segment is:
A) $456,000
B) $140,000
C) $28,000
D) $676,000

Explanation / Answer

Hi, Contribution of the West Business Segment is calculated as follows: 970000 (Sales Revenue) - 514000 (Variable Expenses) = 456000 Fixed Cost is not excluded for calculating contribution margin. Thanks, Aman

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