Leis Retail Company has two stores: M and N.During March,Store N had sales of $180,000,a segment margin of 30%,and traceable fixed expenses of $26,000.The company as a whole had a contribution margin ratio of 25% and $120,000 in total contribution margin.Based on this information,what were the total variable expenses in Store M for the month?
A) $140,000.
B) $260,000.
C) $300,000.
D) $360,000.

Question

Quizplus · Accepted Answer

We can use the formula for contribution margin to calculate the total sales for the company:

Contribution margin = Total sales - Total variable expenses

25% = Total sales - Total variable expenses

Total sales = $480,000 ($120,000 / 0.25)

Next, we can use the segment margin formula to calculate the total variable expenses for Store N:

Segment margin = Sales - Variable expenses - Traceable fixed expenses

30% = $180,000 - Variable expenses - $26,000

Variable expenses = $107,200

We know that the total variable expenses for both stores must equal the total variable expenses for the company as a whole:

Total variable expenses = $480,000 x 0.75 - $107,200

Total variable expenses = $262,800

Therefore, the total variable expenses in Store M for the month were:

Total variable expenses for Store M = $262,800 - $107,200 = $155,600

So the answer is B.

Leis Retail Company Has Two Stores: M and N