Urban Athletics Company has two store locations North and So

Urban Athletics Company has two store locations, North and South. During October, the company reported net income of $192,000 on sales of $905,000. Sales in the North store were $680,000 and variable costs in the South store were 60% of sales. The contribution margin in the North store was $204,000. If total direct costs are $50,000 allocated fixed cost must be

Solution

Contribution margin South store = (905000-680000)*(1-0.6)= $90000 Allocated Fixed costs = (204000+90000-50000)-192000= $52000