Question

The following information was taken from the segmented income statement of Restin, Inc., and the company's three divisions:

	Restin, Inc.		Los Angeles Division				Bay Area Division			Central Valley Division
Revenues	$	952,000		$	264,000		$	299,000			$	389,000
Variable operating expenses		525,200			145,200			160,000				220,000
Controllable fixed expenses		234,000			73,000			83,000				78,000
Noncontrollable fixed expenses		84,000			23,000			28,000				33,000

In addition, the company incurred common fixed costs of $20,400.

Bay Area's segment profit margin is:

Multiple Choice

• $28,000.

• $21,200.

• $139,000.

• $20,400.

• $56,000.

Answer 1

Bay Area's segment profit margin is: $28,000.

Revenues - Variable operating expenses - Controllable fixed expenses - Noncontrollable fixed expenses

Segment Profit Margin = 299000 - 160000 - 83000 - 28000 = 28000