A properly constructed segmented income statement in a contribution format would show that the segment margin of the East business segment is:
A)$125,000
B)$66,000
C)-$28,000
D)-$57,000

Question

Quizplus · Accepted Answer

A segmented income statement in a contribution format shows the contribution margin and fixed expenses of each segment. The East business segment has a contribution margin of $97,000 (sales revenue of $300,000 minus variable expenses of $203,000). The fixed expenses for this segment are $163,000. Therefore, the segment margin for the East business segment would be $97,000 minus $163,000, which equals -$66,000. However, since the question asks for the absolute value of the segment margin, the answer is $66,000 (choice B).

A Properly Constructed Segmented Income Statement in a Contribution Format