Question

Sandy Shores Corporation operates two stores: J and K. The following information relates to J: Sales revenue$1,300,000 Variable operating expenses 600,000 Fixed expenses: Traceable to J and controllable by J 275,000 Traceable to J and controllable by others 80,000 J's segment contribution margin is: Multiple Choice $700,000. $745,000. $425,000. $620,000. $345,000.

Answer 1

Answer:

Sandy Shores Corporation

J's Segment Contribution Margin is:

= $700,000.

Explanation:

a) Data and Calculations:

Sales revenue                                        $1,300,000

Variable operating expenses                    600,000

Contribution                                             $700,000

Fixed expenses:

Traceable to J and controllable by J        275,000

Traceable to J and controllable by others 80,000

Total fixed expenses                                355,000

Net operating income                            $345,000

b) The contribution margin is the difference between total sales revenue and the variable costs.  The idea of segment contribution margin is that it covers the fixed expenses, whether controllable by the segment or not.