South 64800 In SolutionSegment margin indicates the profitab

Solution

Segment margin indicates the profitability that applies to individual segment or product lines. Segments should be evaluated based on revenues and costs that are directly related to them.

Therefore Segment Margin = Segment revenues - Variable costs - Avoidable (Traceable) fixed costs.

Segment Margin = 647000 - 375500 - 77500
Segment Margin = 194000

Yes your equation is absolutely correct