Johns Company operates in three different industries each of which is appropriately regarded as a reportable segment.Segment No.1 contributed 60 percent of Johns Company's total sales.Sales for Segment No.1 were $500,000 and total variable costs were $400,000.Total common costs for all segments were $320,000.Johns allocates common costs based on the ratio of each segment's sales to the total sales.What should be the contribution margin presented for Segment No.1?
A)$(100,000)
B)$ 8,000
C)$ 20,000
D)$ 100,000

Question

Quizplus · Accepted Answer

The contribution margin for Segment No.1 is calculated as sales minus variable costs, which is $500,000 - $400,000 = $100,000. The allocation of common costs is not considered in calculating the contribution margin for a specific segment.

Johns Company Operates in Three Different Industries Each of Which