Question

Carter Industries has two divisions: the West Division and the East Division. Information relating to the divisions for the year just ended is as follows: West East Units produced and sold 30,000 40,000 Selling price per unit $ 8 $ 15 Variable costs per unit 3 5 Direct fixed cost 48,000 110,000 Common fixed cost 40,000 40,000 Common fixed expenses have been allocated equally to each of the two divisions. Carter's segment margin for the West Division is: 29) A) $110,000. B) $30,000. C) $102,000. D) $150,000.

Answer 1

B. $132,000.

Solution : Segment margin is calculated by deducting all expenses that are directly traceable to the segment. it doesn't include corporate common expenses.

So, Contribution = 50000 x(10-6) = $ 200000

Less : Direct fixed cost ($ 68000)

Segment Margin $ 132000