The following information is available for Binder Inc.and its two divisions, Books and Periodicals: $\begin{array}{cccc}&\text { Company } & \text { Books } & \text { Periodicals } \
&\text { as a whole } & \text { Division } & \text { Division }\\hline
\text { Net sales } & \$ 100,000 & \$ 50,000 & \$ 50,000\
\text { Fixed costs: }\
\text { Controllable by }\
\text { division manager } & 16,500 & 12,500 & 4,000 \
\text { Controllable by others } & 8,000 & 5,000 & 3,000 \
\text { Variable costs: } & & & \
\text { Cost of merchandise sold } & 24,500 & 17,500 & 7,000 \
\text { Operating expenses } & 16,400 & 10,000 & 6,400\
\text { Unallocated costs }&1,000
\end{array}$ _____ is the contribution controllable by the manager of the Periodicals Division.
A)$29,600
B)$36,600
C)$36,000
D)$32,600

Question

Quizplus · Accepted Answer

The contribution controllable by the manager of the Periodicals Division is calculated by subtracting the controllable fixed costs and variable costs from the net sales of the Periodicals Division. So, for the Periodicals Division: Net sales ($50,000) - Controllable fixed costs by division manager ($4,000) - Variable costs (Cost of merchandise sold $7,000 + Operating expenses $6,400) = $50,000 - $4,000 - ($7,000 + $6,400) = $50,000 - $4,000 - $13,400 = $32,600.

The Following Information Is Available for Binder Inc _____ Is the Contribution Controllable by the Manager of the Divisions