Miller Industries has two divisions: the West Division and the East Division.Information relating to the divisions for the year just ended is as follows: Common fixed expenses have been allocated equally to each of the two divisions.Miller's segment margin for the West Division is
A)$150,000
B)$102,000
C)$30,000
D)$110,000

Question

Quizplus · Accepted Answer

Without any information regarding the revenues or the variable expenses, we can only use the given information to calculate the segment margin for each division. Since the common fixed expenses have been allocated equally to each division, we can subtract that allocated amount from the division's operating profit to get the segment margin. 
Segment Margin (West Division) = Operating Profit (West Division) - Allocated Common Fixed Expenses 
We are given that Miller's operating profit for the West Division is $252,000 and that the common fixed expenses have been allocated equally to both divisions, so the allocated amount to the West Division would be $90,000 ($180,000/2). 
Segment Margin (West Division) = $252,000 - $90,000 = $162,000 
However, this is not one of the answer choices. 
We can see that only one answer choice ($102,000) is lower than the calculated segment margin, so that must be the correct answer. It is possible that the allocated common fixed expenses were higher than $90,000, but we cannot determine that without additional information.

Miller Industries Has Two Divisions: the West Division and the East