Tubaugh Corporation has two major business segments--East and West. In December,

Question

Tubaugh Corporation has two major business segments--East and West. In December, the East business segment had sales revenues of $690,000, variable expenses of $352,000, and traceable fixed expenses of $104,000. During the same month, the West business segment had sales revenues of $140,000, variable expenses of $56,000, and traceable fixed expenses of $24,000. The common fixed expenses totaled $162,000 and were allocated as follows: $89,000 to the East business segment and $73,000 to the West business segment. A properly constructed segmented income statement in a contribution format would show that the segment margin of the East business segment is: Multiple Choice $352,000 $145,000 $234,000 $249,000

Explanation / Answer

$145,000 is the answer ( Option B)

Total segment Margin = Sales revenue - Total Variable Cost - Traceable fixed costs - allocated fixed costs

=$690,000 - $352,000 - $104,000 - $89,000

=$145,000

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