Fun-Town Amusement Center Fun-Town Amusement Center offers a variety of family entertainment. The amusement center consists of three separate divisions: miniature golf, arcade, and laser tag. The following information in available regarding each of these divisions for the year just ended:
Common fixed costs of $60,000 are divided equally among the divisions.
Refer to the Fun-Town Amusement Center information above. The segment margin for the arcade division is:
A) $300,000
B) $400,000
C) $360,000
D) $340,000

Question

Fun-Town Amusement Center Fun-Town Amusement Center offers a variety of family entertainment. The amusement center consists of three separate divisions: miniature golf, arcade, and laser tag. The following information in available regarding each of these divisions for the year just ended:
 Common fixed costs of $60,000 are divided equally among the divisions.
Refer to the Fun-Town Amusement Center information above. The segment margin for the arcade division is:
A) $300,000 
B) $400,000 
C) $360,000 
D) $340,000

Quizplus · Accepted Answer

To find the segment margin for the arcade division, we need to subtract the variable costs and its share of the common fixed costs from its revenue. From the information provided, we know that the arcade division generated revenue of $500,000 and had variable costs of $140,000, leaving a contribution margin of $360,000. Since the common fixed costs are allocated equally among the three divisions, the arcade division's share of the common fixed costs is $20,000 ($60,000/3), which we subtract from the contribution margin to get the segment margin of $340,000. Therefore, the correct answer is C) $360,000.

Fun-Town Amusement Center Fun-Town Amusement Center Offers a Variety of Family