Miller Industries has two divisions: the West Division and the East Division.Information relating to the divisions for the year just ended is as follows: Common fixed expenses have been allocated equally to each of the two divisions.Miller's segment margin for the West Division is:
A)$150,000.
B)$102,000.
C)$30,000.
D)$110,000.

Question

Miller Industries has two divisions: the West Division and the East Division.Information relating to the divisions for the year just ended is as follows:  Common fixed expenses have been allocated equally to each of the two divisions.Miller's segment margin for the West Division is:
A)$150,000. 
B)$102,000. 
C)$30,000. 
D)$110,000.

Quizplus · Accepted Answer

To calculate the segment margin for the West Division, we need to first calculate its contribution margin:
Sales revenue = $400,000
Variable expenses = $180,000
Contribution margin = $220,000
Common fixed expenses allocated to the West Division = $80,000/2 = $40,000
Segment margin = Contribution margin - Common fixed expenses
Segment margin for the West Division = $220,000 - $40,000 = $180,000
Therefore, the correct answer is B) $102,000.

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