The following information was taken from the segmented income statement of Resti

Question

The following information was taken from the segmented income statement of Restin, Inc., and the company's three divisions:

In addition, the company incurred common fixed costs of $19,500.

The profit margin controllable by the Central Valley segment manager is:

Restin, Inc. Los Angeles Division Bay Area Division Central Valley Division Revenues $ 880,000 $ 240,000 $ 275,000 $ 365,000 Variable operating expenses 482,000 132,000 145,000 205,000 Controllable fixed expenses 225,000 70,000 80,000 75,000 Noncontrollable fixed expenses 75,000 20,000 25,000 30,000

Explanation / Answer

Calculate profit margin controllable by the central valley segment :

The profit margin controllable by the Central Valley segment manager is: $85000

Central velley division Revenues 365000 Less: Variable operating expense -205000 Contribution margin 160000 Less: Controllable fixed expenses -75000 Profit margin controllable 85000

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