Homework Answers
Outlet B's sales = $800,000
Outlet B's variable expenses = $480,000
Outlet B's contribution margin = Outlet B's sales - Outlet B's variable expenses
= 800,000 - 480,000
= $320,000
Outlet B's contribution margin ratio = Outlet B's contribution margin/sales
= 320,000/800,000
= 40%
Increase in sales = $120,000
Increase in contribution margin = Increase in sales x Contribution margin ratio
= 120,000 x 40%
= $48,000
Increase in fixed expenses = $46,000
Increase in outlet B's segment margin = Increase in contribution margin - Increase in fixed expenses
= 48,000 - 46,000
= $2,000
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