Question

Tubaugh Corporation has two major business segments--East and West. In December, the East business segment had sales revenues of $320,000, variable expenses of $175,000, and traceable fixed expenses of $39,000. During the same month, the West business segment had sales revenues of $990,000, variable expenses of $512,000, and traceable fixed expenses of $189,000. The common fixed expenses totaled $286,000 and were allocated as follows: $143,000 to the East business segment and $143,000 to the West business segment. A properly constructed segmented income statement in a contribution format would show that the segment margin of the East business segment is:

Answer 1

Answer:

Segmented income statement of Tubaugh Corp (East Division)

Particulars                                           Amount

Sales                                                   $320,000

Less: Variable Expenses                   $175,000

Contribution Margin                           $145,000

Less: Direct Fixed Expenses             $39,000

Contribution to indirect expenses  $106,000

Note: While calculating segement margin, indirect fixed expenses ($143,000 in this case)are not considered, these expenses are considered at the time of calculation of final net inome of company as a whole.