U.S.Products operates two divisions with the following sales and expense information for the month of July: East Division: Sales $240,000; Contribution margin ratio 35%, Direct fixed expenses $48,000.
West Division: Sales $160,000; Contribution margin ratio 50%, Direct fixed expenses $32,000.
U.S.Products' total fixed expenses during July was $200,000.
The East Division's segment margin for July is:
A)$36,000.
B)$48,000.
C)$80,000.
D)$84,000.

Question

Quizplus · Accepted Answer

The segment margin is calculated as the contribution margin minus the direct fixed expenses. For the East Division, the contribution margin is 35% of $240,000, which is $84,000. Subtracting the direct fixed expenses of $48,000 gives a segment margin of $36,000.

USProducts Operates Two Divisions with the Following Sales and Expense