1 More Company has two divisions, L and M. During July, the contribution margin

Question

1 More Company has two divisions, L and M. During July, the contribution margin in Division L was $60,000. The contribution margin ratio in Division M was 40% and its sales were $250,000. Division M's segment margin was $60,000. The common fixed expenses were $50,000 and the company net operating income was $20,000. The segment margin for Division L was:

$10.51 $10.12 $9.91 $9.54 1 More Company has two divisions, L and M. During July, the contribution margin in Division L was $60,000. The contribution margin ratio in Division M was 40% and its sales were $250,000. Division M's segment margin was $60,000. The common fixed expenses were $50,000 and the company net operating income was $20,000. The segment margin for Division L was: Heller Corporation uses the weighted-average method in its process costing system. Data concerning the first processing department for the most recent month are listed below:

Explanation / Answer

Hi,

Please find the answers as follows:

Part A:

Net Operating Income = Total Segment Margin - Common Fixed Expenses

20000 = Total Segment Margin - 50000

Total Segment Margin = 70000

Total Segment Margin = Segment Margin of L + Segment Margin of M

70000 =Segment Margin of L + 60000

Segment Margin of L = 10000

Option B (10000) is the answer.

Part B:

Materials:

Units Transferred to Next Department = 8300

+ Ending WIP (1400*.60) = 840

Equivalent Units of Production = 9140 Units

Cost of Opening WIP = 3600

Costs Added = 92500

Total Cost = 96100

Cost Per Equivalent Unit = 96100/9140 = 10.51

Option A (10.51) is correct.

Thanks.

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