Tubaugh Corporation has two major business segments-East and West. In December,

Question

Tubaugh Corporation has two major business segments-East and West. In December, the East business segment had sales revenues of $400,000, variable expenses of $215,000, and traceable fixed expenses of $47,000. During the same month, the West business segment had sales revenues of $1,070,000, variable expenses of $544,000, and traceable fixed expenses of $205,000. The common fixed expenses totaled $318,000 and were allocated as follows: $159,000 to the East business segment and $159,000 to the West business segment A properly constructed segmented income statement in a contribution format would show that the segment margin of the East business segment is:

Explanation / Answer

Calculation segment margin of EAST Business segment:

Particulars $ Sales Revenue 400000 Less: Variable Expenses 215000 Contribution Margin (400000 - 215000) 185000 Less: Traceable fixed expenses 47000 Segment Margin (185000-47000) 138000 Therefore the right answer is option (b) $ 138000

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