Question

Wingate Company has the following information available for three divisions of the company: Division A Division B Division C Sales $250,000 $400,000 $350,000 Variable Expenses 52% 30% 40% Fixed Expenses Controllable by Manager $60,000 $200,000 $175,000 Fixed Expenses Controllable by Others $10,000 $5,000 $7,500 Unallocated expenses for all three divisions are $22,000. What is the overall contribution by Division A?

A.$53,000
B.$75,000
C.$80,000
D.$280,000

Answer 1

$50,000

Step-by-step explanation:

Given that,

For Division A:

Sales = $250,000

Variable Expenses = 52% of sales

Fixed Expenses Controllable by Manager = $60,000

Fixed Expenses Controllable by Others = $10,000

Overall contribution of a particular division is determined by deducting all of the expenses includes fixed and variable from the overall sales revenue.

Unallocated expenses are referred as the organizational expenses and not included in the overall contribution.

Overall contribution by Division A:

= Sales - Variable expenses - Fixed expenses

= $250,000 - ($250,000 × 0.52) - ($60,000 + $10,000)

= $250,000 - $130,000 - $70,000

= $50,000