Martin Company sells two products, Standard and Deluxe. Data for activity during
ID: 2454821 • Letter: M
Question
Martin Company sells two products, Standard and Deluxe. Data for activity during January are as follows:
Standard
Deluxe
Sales
$100,000
$120,000
Contribution margin
35%
30%
Traceable fixed costs
$15,000
$25,000
Required:
Prepare a Segment Margin income statement. Common fixed costs total $25,000 & are allocated one-half to Standard and one-half to Deluxe ( hint: allocation of common fixed costs may not be relevant to a Segment Margin Income Statement)
Standard
Deluxe
Sales
$100,000
$120,000
Contribution margin
35%
30%
Traceable fixed costs
$15,000
$25,000
Explanation / Answer
Solution :
Segment Margin income statement
total
Standard
Deluxe
Sales
220,000
100,000
120,000
Variable cost (sales - contribution)
149,000
65,000
84,000
Contribution margin (35%x10000), (30% x 120000)
71,000
35,000
36,000
Traceable fixed costs
40,000
15,000
25,000
Segment Margin income
31,000
Common fixed costs
25,000
Net operating income
6,000
Segment Margin income statement
total
Standard
Deluxe
Sales
220,000
100,000
120,000
Variable cost (sales - contribution)
149,000
65,000
84,000
Contribution margin (35%x10000), (30% x 120000)
71,000
35,000
36,000
Traceable fixed costs
40,000
15,000
25,000
Segment Margin income
31,000
Common fixed costs
25,000
Net operating income
6,000
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