Carroll Corporation has two products, Q and P. During June, the company's net operating income was $24,500, and the common fixed expenses were $53,000. The contribution margin ratio for Product Q was 40%, its sales were $138,000, and its segment margin was $45,000. If the contribution margin for Product P was $43,000, the segment margin for Product P was:
A) $32,500
B) $45,000
C) $8,000
D) $77,500

Question

Quizplus · Accepted Answer

The total segment margin is the net operating income plus the common fixed expenses: $24,500 + $53,000 = $77,500. Since Product Q's segment margin is $45,000, Product P's segment margin is the total segment margin minus Product Q's segment margin: $77,500 - $45,000 = $32,500.

Carroll Corporation Has Two Products, Q and P