Question

Divisions a and b of denner company reported the following results for october:

division A division B
sales $90,000 $150,000
variable expense as a percentage of sales 70% 60%
segment margin $2,000 $23,000
if common fixed expenses were $31,000, what were the total fixed expenses?
a) $31,000.
b) $52,000.
c) $62,000.
d) $93,000.

Answer 1

The total fixed expenses cannot be determined based on the given data.

Step-by-step explanation:

First, we need to calculate the segment margin for each division:

• Segment Margin of Division A = Sales of Division A - Variable Expenses of Division A = $90,000 - (70% of $90,000) = $27,000
• Segment Margin of Division B = Sales of Division B - Variable Expenses of Division B = $150,000 - (60% of $150,000) = $90,000

Next, we can calculate the total fixed expenses by subtracting the segment margin of each division from the common fixed expenses:

• Total Fixed Expenses = Common Fixed Expenses - Segment Margin of Division A - Segment Margin of Division B = $31,000 - $27,000 - $90,000 = $-86,000

Since the result is negative, it means that there is an error in the calculation or the provided information. Therefore, we cannot determine the total fixed expenses based on the given data.