The Gasson Company sells three products, Product A, Product B and Product C, and

Question

The Gasson Company sells three products, Product A, Product B and Product C, and had sales of $1,000,000 during the month of June.

The company's overall contribution margin ratio was 37% and fixed expenses totaled $350,000.

Sales were:

Product A, $500,000;

Product B, $300,000; and

Product C, $200,000.

Traceable fixed costs were:

Product A, $120,000;

Product B, $100,000; and

Product C, $60,000.

The variable expenses of Product A were $300,000 and the variable expenses of Product B were $180,000.

1.The net operating income for the company as a whole for June was

2.The contribution margin ratio for Product C is

Explanation / Answer

Segment income statement :

1.The net operating income for the company as a whole for June was 20000

2.The contribution margin ratio for Product C is = 50000*100/200000 = 25%

Product A Product B Product C Total Sales 500000 300000 200000 1000000 Variable expense -300000 -180000 -150000 630000 Contribution margin 200000 120000 50000 370000 Traceable fixed expense -120000 -100000 -60000 -280000 Segment margin 80000 20000 -10000 90000 Common expense -70000 Net operating income 20000

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