Eyestone Corporation has two divisions, A and B.The following data pertain to operations in October: If common fixed expenses were $17,000, total fixed expenses were:
A)$48,000
B)$13,000
C)$31,000
D)$53,000

Question

Eyestone Corporation has two divisions, A and B.The following data pertain to operations in October:  If common fixed expenses were $17,000, total fixed expenses were:
A)$48,000 
B)$13,000 
C)$31,000 
D)$53,000

Quizplus · Accepted Answer

11ea7998_5dbb_7ebd_911b_817cd247dd8b_TB2627_00_TB2627_00 Division A:
Variable expenses = Variable expense ratio × Sales
= 0.60 × $80,000 = $48,000
Division B:
Variable expenses = Variable expense ratio × Sales
= 0.80 × $170,000 = $136,000 11ea7998_5dbb_a5ce_911b_63b282e72909_TB2627_00_TB2627_00 Division A:
Segment margin = Contribution margin - Traceable fixed expenses
$10,000 = $32,000 - Traceable fixed expenses
Traceable fixed expenses = $32,000 - $10,000 = $22,000
Division B:
Segment margin = Contribution margin - Traceable fixed expenses
$25,000 = $34,000 - Traceable fixed expenses
Traceable fixed expenses = $34,000 - $25,000 = $9,000 11ea7998_5dbb_a5cf_911b_119ed7cf940d_TB2627_00_TB2627_00 Total fixed expenses = Traceable fixed expenses + Common fixed expenses
= $31,000 + $17,000 = $48,000

Eyestone Corporation Has Two Divisions, a and B