Carter Industries has two divisions: the West Division and the East Division.Information relating to the divisions for the year just ended is as follows:
$$\begin{array} { | l | r | r | }
\hline & \text { West } & \text { East } \
\hline \text { Units produced and sold } & 30,000 & 40,000 \
\hline \text { Selling price per unit } & \$ 8 & \$ 15 \
\hline \text { Variable costs per unit } & 3 & 5 \
\hline \text { Direct fixed cost } & 48,000 & 110,000 \
\hline \text { Common fued cost } & 40,000 & 40,000 \
\hline
\end{array}$$
Common fixed expenses have been allocated equally to each of the two divisions.Carter's segment margin for the West Division is:

A) $150,000.
B) $102,000.
C) $30,000.
D) $110,000.

Question

Carter Industries has two divisions: the West Division and the East Division.Information relating to the divisions for the year just ended is as follows: 
$$\begin{array} { | l | r | r | } 
\hline & \text { West } & \text { East } \
\hline \text { Units produced and sold } & 30,000 & 40,000 \
\hline \text { Selling price per unit } & \$ 8 & \$ 15 \
\hline \text { Variable costs per unit } & 3 & 5 \
\hline \text { Direct fixed cost } & 48,000 & 110,000 \
\hline \text { Common fued cost } & 40,000 & 40,000 \
\hline
\end{array}$$
Common fixed expenses have been allocated equally to each of the two divisions.Carter's segment margin for the West Division is:

A) $150,000.
B) $102,000.
C) $30,000.
D) $110,000.

Quizplus · Accepted Answer

Segment margin is sales revenue minus variable expenses and direct fixed expenses. For the West Division, sales revenue is 30,000 units * $8 per unit = $240,000. Variable expenses are 30,000 units * $3 per unit = $90,000. Direct fixed expenses are $48,000. Therefore, segment margin is $240,000 - $90,000 - $48,000 = $102,000.

Carter Industries Has Two Divisions: the West Division and the East