Question

canon company has two sales areas: north and south. during last year, the contribution margin in the north was $50,000, or 20% of sales. the segment margin in the south was $15,000, or 8% of sales. traceable fixed costs were $15,000 in the north and $10,000 in the south. during last year, the company reported total operating income of $26,000. what were the total fixed costs (traceable and common) for canon company for the year? question 13 options: a) $24,000. b) $25,000. c) $49,000. d) $50,000.

Answer 1

To calculate the total fixed costs of Canon Company, one subtracts the total operating income from the combined contribution margins of both sales areas. The total fixed costs, which include traceable and common costs, amount to $29,000 for the year.

Step-by-step explanation:

The student is asking how to calculate the total fixed costs for Canon Company given certain financial information. To answer this, we first recognize that the contribution margin in the north was $50,000 and the segment margin in the south was $15,000. We also know the traceable fixed costs which were $15,000 in the north and $10,000 in the south. Given that the total operating income of the company was $26,000, we can determine the total fixed costs.

Here's how we can calculate it:

1. Determine the contribution margin for the south by subtracting traceable fixed costs from the segment margin: $15,000 - $10,000 = $5,000.
2. Next, calculate the combined contribution margin by adding the north and south: $50,000 + $5,000 = $55,000.
3. To find the total fixed costs, subtract the total operating income from the combined contribution margin: $55,000 - $26,000 = $29,000.

Therefore, the total fixed costs for Canon Company for that year, including traceable and common fixed costs, are $29,000.