s segmented income statement for the most recent month is given below $300,000 1

Question

s segmented income statement for the most recent month is given below $300,000 192,000 108,000 76,000 32,000 27000 $5,000 $100,000 72,000 28,000 120,000 80,000 Traceable fixed expenses Segment margin Common fixed expenses Net $7,000 $25,000 income For each of the following questions, refer back to the above original data If Store B sales increase by $20,000 with no change in fixed expenses, the overall company net operating income should O Increase by $12,000 O increase by $8.000 O increase by $5,000 O increase by $2,500

Explanation / Answer

Contribution margin ratio for B=Contribution margin/Sales

=(80000/200,000)=40%

Hence increase in sales would cause an increase of Contribution margin

ie (0.4*$20000)

ie an increase of $8000.

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