Question

Common fixed expenses have been allocated equally to each of the two divisions. Carter's segment margin for the West Division is:

Answer 1

Answer: B. $132,000

Step-by-step explanation:

When calculating the Segment margin, it is important to note that only costs that are directly traceable to the segment are to be deducted from the revenue.

The segment margin therefore is;

= Sales revenue - Variable costs - Direct fixed costs

= (50,000 * 10) - (50,000 * 6) - 68,000

= 500,000 - 300,000 - 68,000

= $132,000