Question

Bovine Corporation has two divisions: televisions and mobile phones. The mobile phone division has a contribution margin of $600,000. The company's common fixed costs and total traceable fixed costs are $100,000 and $500,000 respectively. Assuming the traceable fixed costs of the television division are $300,000, what is the segment margin of the mobile phone division

Answer 1

Segment margin= $300,000

Step-by-step explanation:

Giving the following formula:

Mobile phone:

Contribution margin= $600,000

Traceable fixed cost= $100,000

Common fixed costs= $500,000

First, we need to calculate the traceable fixed cost to mobile phone:

Traceable fixed cost= 500,000 - 300,000= $200,000

Now, the segment margin of mobile phone:

Segment margin= 600,000 - 100,000 - 200,000

Segment margin= $300,000