Cervetti Corporation has two major business segments-East and West. In July, the
ID: 2553175 • Letter: C
Question
Cervetti Corporation has two major business segments-East and West. In July, the East business segment had sales revenues of $220,000, variable expenses of $125,000, and traceable fixed expenses of $29,000. During the same month, the West business segment had sales revenues of $890,000, variable expenses of $472,000, and traceable fixed expenses of $169,000. The common fixed expenses totaled $246,000 and were allocated as follows: $123,000 to the East business segment and $123,000 to the West business segment.
The contribution margin of the West business segment is:
a. 418,000
b. -57,000
c. 513,000
d. 66,000
Explanation / Answer
a. 418,000
West contribution margin = Sales ? Variable expenses
= $890,000 ? $472,000 = $418,000