Insider Corporation has two divisions, J and K. During March, the contribution m
ID: 2712249 • Letter: I
Question
Insider Corporation has two divisions, J and K. During March, the contribution margin in Division J was $38,000. The contribution margin ratio in Division K was 40%, its sales were $133,000, and its segment margin was $40,000. The common fixed expenses in the company were $48,000, and the company's net operating income was $22,000. The segment margin for Division J was:
A $30,000
B $40,000
c $8,000
D $70,000
Insider Corporation has two divisions, J and K. During March, the contribution margin in Division J was $38,000. The contribution margin ratio in Division K was 40%, its sales were $133,000, and its segment margin was $40,000. The common fixed expenses in the company were $48,000, and the company's net operating income was $22,000. The segment margin for Division J was:
Explanation / Answer
Contribution Margin 38000 Contribution Margin Ratio 40% Sales 133000 Segment Margin 40000 Fixed Cost 48000 Net Operating Income 22000 Contribution Margin of Division K = Sales* Contribution Ratio = 133000*40% 53200 Total 38000+53200 Total Contribution Margin 91200 Less: Fixed Cost -48000 Total Margin 43200 Fixed cost of K = 40000--22000 = 18000 Fixed Cost of J 48000-18000 30000 Segment Margin 38000-30000 = 8000 The correct answer is C. $ 8000 1