The Gasson Company sells three products, Product A, Product B and Product C, and had sales of £1,000,000 during the month of June. The company's overall contribution margin ratio was 37% and fixed expenses totaled £350,000. Sales were: Product A, £500,000; Product B, £300,000; and Product C, £200,000. Traceable fixed costs were: Product A, £120,000; Product B, £100,000; and Product C, £60,000. The variable expenses of Product A were £300,000 and the variable expenses of Product B were £180,000.
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The product line segment margin for Product A for June was
A)£200,000.
B)£80,000.
C)£65,000.
D)£10,000.

Question

Quizplus · Accepted Answer

The product line segment margin for Product A is calculated by subtracting both the traceable fixed costs and variable expenses from Product A's sales. For Product A: Sales (£500,000) - Variable Expenses (£300,000) - Traceable Fixed Costs (£120,000) = £80,000.

The Gasson Company Sells Three Products, Product A, Product B