Cervetti Corporation has two major business segments-East and West. In July, the

Question

Cervetti Corporation has two major business segments-East and West. In July, the East business segment had sales revenues of $270,000, variable expenses of $150,000, and traceable fixed expenses of $34,000. During the same month, the West business segment had sales revenues of $940,000, variable expenses of $492,000, and traceable fixed expenses of $179,000. The common fixed expenses totaled $266,000 and were allocated as follows: $133,000 to the East business segment and $133,000 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:

$150,000

$86,000

$(13,000)

$(37,000)

Cervetti Corporation has two major business segments-East and West. In July, the East business segment had sales revenues of $270,000, variable expenses of $150,000, and traceable fixed expenses of $34,000. During the same month, the West business segment had sales revenues of $940,000, variable expenses of $492,000, and traceable fixed expenses of $179,000. The common fixed expenses totaled $266,000 and were allocated as follows: $133,000 to the East business segment and $133,000 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

Answer: $86000

Particulars Amount ($) Sales 270000 Less: Variable expenses 150000 Contribution margin 120000 Traceable fixed expenses 34000 Segment margin 86000

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