Carroll Corporation has two products, Q and P. During June, the company's net operating income was $25,000, and the common fixed expenses were $37,000. The contribution margin ratio for Product Q was 30%, its sales were $200,000, and its segment margin was $21,000. If the contribution margin for Product P was $80,000, the segment margin for Product P was:
A) $62,000
B) $59,000
C) $37,000
D) $41,000

Question

Quizplus · Accepted Answer

The segment margin for Product P is calculated by subtracting the common fixed expenses from the contribution margin of Product P. The total segment margin for both products is the net operating income plus common fixed expenses, which is $62,000. Since Product Q's segment margin is $21,000, Product P's segment margin is $62,000 - $21,000 = $41,000.

Carroll Corporation Has Two Products, Q and P