Eyestone Corporation has two divisions,A and B.The following data pertain to operations in October:
If common fixed expenses were $17,000,total fixed expenses were:
A) $48,000
B) $13,000
C) $31,000
D) $53,000

Question

Eyestone Corporation has two divisions,A and B.The following data pertain to operations in October:
 If common fixed expenses were $17,000,total fixed expenses were:
A) $48,000 
B) $13,000 
C) $31,000 
D) $53,000

Quizplus · Accepted Answer

11ea7761_1818_e85b_81a5_1313bc92ae38_TB2580_00 Division A:
Variable expenses = Variable expense ratio × Sales
= 0.60 × $80,000 = $48,000
Division B:
Variable expenses = Variable expense ratio × Sales
= 0.80 × $170,000 = $136,000
 11ea7761_1818_e85c_81a5_8d56c278eafd_TB2580_00 Division A:
Segment margin = Contribution margin - Traceable fixed expenses
$10,000 = $32,000 - Traceable fixed expenses
Traceable fixed expenses = $32,000 - $10,000 = $22,000
Division B:
Segment margin = Contribution margin - Traceable fixed expenses
$25,000 = $34,000 - Traceable fixed expenses
Traceable fixed expenses = $34,000 - $25,000 = $9,000
 11ea7761_1818_e85d_81a5_9fc57180b01a_TB2580_00 Total fixed expenses = Traceable fixed expenses + Common fixed expenses
= $31,000 + $17,000 = $48,000

Eyestone Corporation Has Two Divisions,A and B