The Gasson Company sells three products, A, B, and C. The total sales for the ov

Question

 The Gasson Company sells three products, A, B, and C. The total sales for the overall company were $1,000,000 during the month of June. During June, the company reported an overall contribution margin ratio of 37% and the total fixed costs for the entire company were $350,000. During June, Product A had sales of $500,000; Product B had sales of $300,000; and sales of Product C totaled $200,000. The traceable fixed costs for each product were: Product A, $120,000; Product B, $100,000; and Product C, $60,000. The variable costs of Product A were $300,000 and the variable costs of Product B were $180,000.  Calculate the segment margin for Product A for June. Do not use decimals in your answer. 

Explanation / Answer

Segment Margin For product A :-

Sales 500000 - Variable costs 300000 = Contribution margin $ 200000

Now,

Contribution margin $ 200000 - traceable fixed costs 120000 = Segment margin $ 80000

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