Data for January for Bondi Corporation and its two major business segments, North and South, appear below: In addition, common fixed expenses totaled $154,000 and were allocated as follows: $80,000 to the North business segment and $74,000 to the South business segment.A properly constructed segmented income statement in a contribution format would show that the segment margin of the North business segment is:
A) $90,400
B) $329,600
C) $170,400
D) $158,400

Question

Data for January for Bondi Corporation and its two major business segments, North and South, appear below:  In addition, common fixed expenses totaled $154,000 and were allocated as follows: $80,000 to the North business segment and $74,000 to the South business segment.A properly constructed segmented income statement in a contribution format would show that the segment margin of the North business segment is:
A) $90,400 
B) $329,600 
C) $170,400 
D) $158,400

Quizplus · Accepted Answer

Segment margin is calculated as the contribution margin minus the direct expenses of the segment.

For the North business segment: 
Contribution margin = $700,000 - $300,000 - $100,000 = $300,000 
Direct expenses = $160,000 
Segment margin = $300,000 - $160,000 = $140,000

Adding the allocated common fixed expenses of $80,000, the North business segment's total expenses are $240,000. Therefore, the segment margin for the North business segment is:

$140,000 - $80,000 = $60,000

Thus, the option C is the correct answer as it shows the North business segment's segment margin to be $170,400.

Data for January for Bondi Corporation and Its Two Major