Data for January for Bondi Corporation and its two major business segments, North and South, appear below: In addition, common fixed expenses totaled $179,000 and were allocated as follows: $93,000 to the North business segment and $86,000 to the South business segment.A properly constructed segmented income statement in a contribution format would show that the segment margin of the North business segment is:
A) $105,000
B) $383,000
C) $198,000
D) $184,000

Question

Data for January for Bondi Corporation and its two major business segments, North and South, appear below:  In addition, common fixed expenses totaled $179,000 and were allocated as follows: $93,000 to the North business segment and $86,000 to the South business segment.A properly constructed segmented income statement in a contribution format would show that the segment margin of the North business segment is:
A) $105,000 
B) $383,000 
C) $198,000 
D) $184,000

Quizplus · Accepted Answer

To calculate the segment margin of the North business segment, we need to first calculate the contribution margin for each segment.

Contribution Margin = Sales - Variable Expenses

North Segment:
Contribution Margin = $950,000 - $500,000 - $200,000 - $60,000 = $190,000

South Segment:
Contribution Margin = $1,250,000 - $600,000 - $300,000 - $70,000 = $280,000

Next, we need to allocate common fixed expenses to the two segments based on the given information.

North Segment:
Segment Margin = Contribution Margin - Allocated Fixed Expenses
Segment Margin = $190,000 - $93,000 = $97,000

South Segment:
Segment Margin = Contribution Margin - Allocated Fixed Expenses
Segment Margin = $280,000 - $86,000 = $194,000

Therefore, the segmented income statement in a contribution format would show that the segment margin of the North business segment is $97,000.

Data for January for Bondi Corporation and Its Two Major