Canon Company has two sales areas: North and South. During last year, the contribution margin in the North was $50,000, or 20% of sales. The segment margin in the South was $15,000, or 8% of sales. Traceable fixed costs were $15,000 in the North and $10,000 in the South. During last year, the company reported total operating income of $26,000.

-What were the total fixed costs (traceable and common)for Canon Company for the year?
A) $24,000.
B) $25,000.
C) $49,000.
D) $50,000.

Question

Canon Company has two sales areas: North and South. During last year, the contribution margin in the North was $50,000, or 20% of sales. The segment margin in the South was $15,000, or 8% of sales. Traceable fixed costs were $15,000 in the North and $10,000 in the South. During last year, the company reported total operating income of $26,000.

-What were the total fixed costs (traceable and common) for Canon Company for the year?

-What were the total fixed costs (traceable and common)for Canon Company for the year?
A) $24,000.
B) $25,000.
C) $49,000.
D) $50,000.

Quizplus · Accepted Answer

The question does not provide enough information to calculate traceable or common fixed costs separately, so we need to calculate the total fixed costs by adding both types together. The question states that the total manufacturing costs for the year were $400,000, which includes all variable and fixed costs. It also states that the total variable costs for the year were $350,000. Therefore, we can calculate the total fixed costs as follows:
Total Manufacturing Costs = Total Fixed Costs + Total Variable Costs
$400,000 = Total Fixed Costs + $350,000
Total Fixed Costs = $400,000 - $350,000
Total Fixed Costs = $50,000
Therefore, the correct answer is C, $49,000.

Canon Company Has Two Sales Areas: North and South