Corporation has two major business segments-East and West. In July, the East bus
ID: 2425787 • Letter: C
Question
Corporation has two major business segments-East and West. In July, the East business segment had sales revenues of $300,000, variable expenses of $165,000, and traceable fixed expenses of $37,000. During the same month, the West business segment had sales revenues of $970,000, variable expenses of $504,000, and traceable fixed expenses of $185,000. The common fixed expenses totaled $278,000 and were allocated as follows: $139,000 to the East business segment and $139,000 to the West business segment. A properly constructed segmented income statement in a contribution format would show that the segment margin of the East business segment is:
Explanation / Answer
Answer:
Segement Income statement for East business segement :
Sales revenue 300,000
(-)Variable Expemses 165,000
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Contribution margin 135,000
(-)Fixed Costs:
Direct Fixed cost 37,000
Common Fixed cost 139,000
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Total Fixed cost 176,000
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Net Income (41,000)
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