Pippen Co. recorded operating data for its shoe division for the year. The company's desired return is 5%. $$\begin{array} { l r }
\text { Sales } & \$ 1,000,000 \
\text { Contribution margin } & 200,000 \
\text { Total direct fixed costs } & 120,000 \
\text { Average total operating assets } & 400,000
\end{array}$$ Which one of the following reflects the controllable margin for the year?

Question

Pippen Co. recorded operating data for its shoe division for the year. The company's desired return is 5%. $$\begin{array} { l r } 
\text { Sales } & \$ 1,000,000 \
\text { Contribution margin } & 200,000 \
\text { Total direct fixed costs } & 120,000 \
\text { Average total operating assets } & 400,000
\end{array}$$ Which one of the following reflects the controllable margin for the year?

Quizplus · Accepted Answer

The controllable margin is calculated as the contribution margin minus the total direct fixed costs: $200,000 - $120,000 = $80,000.

Pippen Co Recorded Operating Data for Its Shoe Division for the the Year