The following information was taken from the business united profit and loss sta

Question

The following information was taken from the business united profit and loss statement of Resell Real Estate Agents for 2014 Resell Real Estate Sydney TamworthNorth Coast Division Division Division $750 000 $200 000 $225 000 $325 000 Revenues Variable operating expenses Controllable fixed expenses Fixed expenses controllable by others $410 000 $110 000 $120 000 $180 000 $210 000 $65 000 $75 000 $70000 $60 000 $15 000 $20 000 $25 000 In addition, the company incurred common fixed costs of $18 000. What was the business unit margin of the Tamworth Division during 2014? A. ($8000) B. $4000 C. $10 000 D. $30 000

Explanation / Answer

Ans. Option C $10,000 *Calculation: Revenue 225000 Less: Variable operating expenses -120000 Less: Controllable fixed expenses -75000 Less: Fixed expenses controllable by others -20000 Margin 10000 *The additional common fixed cost should not be allocated to business segments. The common fixed costs are not traceable to particular segments. So, in the calculation of division wise margin the common fixed expenses are not included.

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