Homework SourseThe following information was taken from the segmented incom
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 | |||||||||
Solution
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 |
