Asked by
Athziri Rodriguez
on Dec 17, 2024
Verified
Tubaugh Corporation has two major business segments--East and West. In December, the East business segment had sales revenues of $370,000, variable expenses of $200,000, and traceable fixed expenses of $44,000. During the same month, the West business segment had sales revenues of $1,040,000, variable expenses of $532,000, and traceable fixed expenses of $199,000. The common fixed expenses totaled $306,000 and were allocated as follows: $153,000 to the East business segment and $153,000 to the West business segment.The contribution margin of the West business segment is:
A) $508,000
B) $(27,000)
C) $693,000
D) $126,000
Contribution Margin
The amount of revenue remaining after deducting variable costs, used to cover fixed costs and contribute to profit.
Variable Expenses
Expenditures that fluctuate in alignment with the quantity of production or sales figures, like labor costs and materials used.
Traceable Fixed Expenses
Fixed expenses that can be directly linked to a specific segment of a business and would disappear if the segment did not exist.
- Calculate contribution margin for business segments.
Verified Answer
DM
Learning Objectives
- Calculate contribution margin for business segments.