Question

City retail sells two products: Standard and Deluxe. The company had sales of $800,000 during the current year. The company’s contribution margin ratio was 40% and total fixed costs totaled $300,000. Sales were $600,000 for Standard and $200,000 for Deluxe. Traceable fixed costs were $150,000 for standard and $90,000 for Deluxe. Variable costs were $360,000 for standard and $120,000 for Deluxe. What is the segment margin for the Deluxe product?

A) (10,000)
B) 10,000
C) 20,000
D) 80,000

Answer 1

A) (10,000)

Step-by-step explanation:

contribution margin = sales - variable cost

= $200,000 - $120,000

= $ 80,000

segment margin = contribution margin - traceable fixed expenses

= $80,000 - $90,000

= ($10,000)

Therefore, The segment margin for the Deluxe product is ($10,000)