Which of the following is used to calculate the segment margin?
A) Segment margin = Segment's sales revenue - Direct fixed costs - Variable costs
B) Segment margin = Segment's sales revenue + Direct fixed costs + Contribution margin
C) Segment margin = Segment's sales revenue - Target cost + Contribution margin
D) Segment margin = Segment's Desired profit - Target cost + Contribution margin
E) Segment margin = Segment's marginal sales + Step cost + Contribution margin

Question

Quizplus · Accepted Answer

The formula to calculate segment margin is Segment's sales revenue minus Direct fixed costs minus Variable costs. Therefore, option A is the correct answer. Option B includes adding direct fixed costs, which is not a part of the calculation. Option C and D have additional terms of target cost and desired profit, which are not included in calculating segment margin. Option E includes marginal sales and step costs, which are not a part of the segment margin calculation.

Which of the Following Is Used to Calculate the Segment