The following information pertains to the Upper Division of Yoko Company: $$\begin{array} { l c }
\text { Net Sales } & \$ 21,000 \
\text { Variable costs: } & \
\text { Cost of merchandise sold } & 7,200 \
\text { Operating expenses } & 2,700 \
\text { Fixed costs: } & \
\text { Controllable by segment manager } & 2,400 \
\text { Controllable by others } & 1,000 \
\text { Unallocated costs } & 7,600
\end{array}$$ The contribution by segment is _____.
A)$7,100
B)$7,700
C)$11,100
D)$8,700

Question

The following information pertains to the Upper Division of Yoko Company: $$\begin{array} { l c } 
\text { Net Sales } & \$ 21,000 \
\text { Variable costs: } & \
\text { Cost of merchandise sold } & 7,200 \
\text { Operating expenses } & 2,700 \
\text { Fixed costs: } & \
\text { Controllable by segment manager } & 2,400 \
\text { Controllable by others } & 1,000 \
\text { Unallocated costs } & 7,600
\end{array}$$ The contribution by segment is _____.
A)$7,100
B)$7,700
C)$11,100
D)$8,700

Quizplus · Accepted Answer

The contribution by segment is calculated by subtracting variable costs from net sales. Here, variable costs include the cost of merchandise sold ($7,200) and operating expenses ($2,700), totaling $9,900. Subtracting this from net sales ($21,000) gives a contribution of $11,100. However, to find the contribution by segment, we also subtract the fixed costs controllable by the segment manager ($2,400), resulting in $11,100 - $2,400 = $8,700. The unallocated costs and costs controllable by others are not subtracted in this calculation. Therefore, the correct answer is D) $8,700, indicating an error in the initial selection.

The Following Information Pertains to the Upper Division of Yoko