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.
-Ieso Corporation's total fixed expenses for the year were:
A) $40,000
B) $100,000
C) $140,000
D) $170,000

Question

Quizplus · Accepted Answer

11ea7761_1835_71ed_81a5_0b0e6122d587_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
Total traceable fixed expenses = $60,000 + $40,000 = $100,000
 11ea7761_1835_71ee_81a5_910532b7b341_TB2580_00 Store J segment margin = $100,000 - $60,000 = $40,000
 11ea7761_1835_98ff_81a5_b5f35f4e275c_TB2580_00 Total segment margin = $40,000 + $30,000 = $70,000
 11ea7761_1835_9900_81a5_63d90ba7995a_TB2580_00 Net operating income = Total segment margin - Common fixed expenses
$30,000 = $70,000 - Common fixed expenses
Common fixed expenses = $70,000 - $30,000 = $40,000
Total fixed expenses = Total traceable fixed expenses + Common fixed expenses
= $100,000 + $40,000 = $140,000

Ieso Corporation Has Two Stores: J and K