The Sphinx division of Shepherd Corporation generated net revenues of $12,000,000 and variable expenses of $7,700,000.If common corporate fixed costs were $1,000,000 and the segment margin was $1,300,000, what are the division's direct fixed expenses?
A)$4,300,000
B)$3,000,000
C)$300,000
D)The answer cannot be determined from the information given.

Question

Quizplus · Accepted Answer

Segment margin = Net revenues - Variable expenses - Direct fixed expenses of the division
$1,300,000 = $12,000,000 - $7,700,000 - Direct fixed expenses
Direct fixed expenses = $3,300,000
Total fixed costs = Corporate fixed costs + Direct fixed expenses
$1,000,000 + $3,300,000 = $4,300,000
Therefore, the division's direct fixed expenses are $3,300,000 and the total fixed expenses are $4,300,000. The answer is B.

The Sphinx Division of Shepherd Corporation Generated Net Revenues of $12,000,000