Part C: Answer two of the three following problem sets. If you answer all three

Question

Part C: Answer two of the three following problem sets. If you answer all three of the problem sets, the third will be considered an extra-credit problem. C1. Segment reporting. Show your work Pratt Corporation has two Ap segment had sales revenues of $130,000, variable expenses of $66,000, and traceable fixed expenses o S17,000. During the same month, the Accessories business segment had sales revenues of variable expenses of $270,000, and traceable fixed expenses of $92,000. Pratt's Net Operating Income was $72,000. 1. Calculate Apparel's segment margin. business segments- Apparel and Accessories. In October, the Apparel business $$40,000, 2. Calculate Accessories segment margin. 3. Calculate Common fixed expenses for Pratt.

Explanation / Answer

1. Apparel's segment margin:

Sales revenues $ 130,000

Variable expenses ($ 66,000)

Contribution Margin $ 64,000

Traceable fixed expenses ($ 17,000)

Segment Margin $ 47,000

2. Accessories' segment margin:

Sales revenues $ 540,000

Variable expenses ($ 270,000)

Contribution margin $ 270,000

Traceable fixed expenses ($ 92,000)

Segment Margin $ 178,000

3. Common fixed expenses for Pratt:

Total Segment Margin of Apparel Accessories = $ 47,000 + $ 178,000 = $ 225,000

Total segment margin - Common fixed expenses = Net operating income

Common fixed expenses = $ 225,000 - $ 72,000 = $ 153,000

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