Ieso Corporation has two stores: J and K. During November, Ieso Corporation reported a net operating income of $30,000 and sales of $450,000. The contribution margin in Store J was $100,000, or 40% of sales. The segment margin in Store K was $30,000, or 15% of sales. Traceable fixed expenses are $60,000 in Store J, and $40,000 in Store K.
-Variable expenses in Store K totaled:
A) $70,000
B) $110,000
C) $200,000
D) $130,000

Question

Quizplus · Accepted Answer

11ea7761_1835_23cb_81a5_e3b8945b80e9_TB2580_00 Store K segment margin = Store K contribution margin - Store K traceable fixed expenses
$30,000 = Store K contribution margin - $40,000
Store K contribution margin = $30,000 + $40,000 = $70,000
Store K segment ratio = Store K segment margin ÷ Store K sales
0.15 = $30,000 ÷ Store K sales
Store K sales = $30,000 ÷ 0.15 = $200,000
 11ea7761_1835_4adc_81a5_cdd75bc7a291_TB2580_00 Store K contribution margin = Store K sales - Store K variable expenses
$70,000 = $200,000 - Store K variable expenses
Store K variable expenses = $200,000 - $70,000 = $130,000

Ieso Corporation Has Two Stores: J and K