Consider the following portion of a segmented income statement for the year just ended. Assume fixed expenses of Division X include $30,000 of direct expenses and that the discontinuance of the department will not affect the sales of the other departments nor reduce the common expenses. What is X's divisional segment margin?
A) ($10,000)
B) $40,000
C) $10,000
D) $100,000

Question

Consider the following portion of a segmented income statement for the year just ended. Assume fixed expenses of Division X include $30,000 of direct expenses and that the discontinuance of the department will not affect the sales of the other departments nor reduce the common expenses.  What is X's divisional segment margin?
A) ($10,000) 
B) $40,000 
C) $10,000 
D) $100,000

Quizplus · Accepted Answer

To calculate divisional segment margin, we subtract the division's direct and allocated fixed expenses from its revenue. 
Segment margin for Division X = $100,000 - ($60,000 + $30,000) = $10,000. Therefore, the correct answer is C.

Consider the Following Portion of a Segmented Income Statement for the Year