Asked by Karina Garcia on May 03, 2024
Verified
Carroll Corporation has two products, Q and P.During June, the company's net operating income was $25,000, and the common fixed expenses were $37,000.The contribution margin ratio for Product Q was 30%, its sales were $200,000, and its segment margin was $21,000.If the contribution margin for Product P was $80,000, the segment margin for Product P was:
A) $62,000
B) $59,000
C) $62,000
D) $41,000
Segment Margin
The amount of profit or loss produced by a particular segment of a business, considering only the revenues and expenses directly attributable to that segment.
Contribution Margin
The difference between sales revenue and variable costs, indicating how much revenue contributes to fixed costs and profit.
- Perceive the significance of segment margins and common fixed charges in shaping the overall net operating income.
- Recognize and compute contribution margins as well as gross margins.
Verified Answer
ZK
Zybrea KnightMay 05, 2024
Final Answer :
D
Explanation :
Net operating income = Segment margin - Common fixed expenses
$25,000 = Segment margin - $37,000
Segment margin = $25,000 + $37,000 = $62,000 Total segment margin = Product Q segment margin + Product P segment margin
$62,000 = $21,000 + Product P segment margin
Product P segment margin = $62,000 - $21,000 = $41,000
$25,000 = Segment margin - $37,000
Segment margin = $25,000 + $37,000 = $62,000 Total segment margin = Product Q segment margin + Product P segment margin
$62,000 = $21,000 + Product P segment margin
Product P segment margin = $62,000 - $21,000 = $41,000
Learning Objectives
- Perceive the significance of segment margins and common fixed charges in shaping the overall net operating income.
- Recognize and compute contribution margins as well as gross margins.
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