Question

The following information pertains to the Southern Division of Olson Company: Net Sales $5,250 Variable Costs: Cost of merchandise sold 1,200 Operating expenses 450 Fixed costs: Controllable by segment manager 600 Controllable by others 1,250 Unallocated costs 1,150 The contribution controllable by a segment manager is ________.

Answer 1

Answer:

The contribution controllable by a segment manager is $ 1,850

Explanation:

Segment Manager`s performance is evaluated on be bases of items directly controllable by them ( controllable contribution)

Calculation of Controllable Contribution :

Net Sales                                                                        $5,250

Less Variable Costs :

Cost of merchandise sold                                               (1,200)

Operating expenses                                                          (450)

Controllable Contribution                                                3,600

Less Controllable Costs:

Fixed Cost Controllable                                                    (600)

Unallocated costs                                                             (1,150)

Contribution Controllable -Segment Manager                1,850