Question

Miracle Green Corporation operates two garden supply stores: A and B. The following information relates to store A: Sales revenue$900,000 Variable operating expenses 400,000 Fixed expenses: Traceable to A and controllable by A 275,000 Traceable to A and controllable by others 120,000 A's segment profit margin is: Multiple Choice $505,000. $105,000. $225,000. $500,000. $380,000.

Answer 1

A's segment profit margin is $105,000.

Step-by-step explanation:

To measure the economic performance of the division, we include other items that the divisional manager can not influence but traceable to the division.

Miracle Green Corporation

Calculation of Store A segment profit margin

Sales revenue $900,000

Less operating expenses ($400,000)

Controllable Contribution $500,000

Less Fixed Expenses

Traceable to A and controllable by A ($275,000)

Controllable Profit $225,000

Less Fixed Expenses

Traceable to A and controllable by others ($120,000)

Segment Profit Margin $105,000