Fun-Town Amusement Center Fun-Town Amusement Center offers a variety of family entertainment. The amusement center consists of three separate divisions: miniature golf, arcade, and laser tag. The following information in available regarding each of these divisions for the year just ended:
Common fixed costs of $60,000 are divided equally among the divisions.
Refer to the Fun-Town Amusement Center information above. The segment margin for the miniature golf division is:
A) $175,000
B) $145,000
C) $125,000
D) $ 85,000

Question

Fun-Town Amusement Center Fun-Town Amusement Center offers a variety of family entertainment. The amusement center consists of three separate divisions: miniature golf, arcade, and laser tag. The following information in available regarding each of these divisions for the year just ended:
 Common fixed costs of $60,000 are divided equally among the divisions.
Refer to the Fun-Town Amusement Center information above. The segment margin for the miniature golf division is:
A) $175,000 
B) $145,000 
C) $125,000 
D) $ 85,000

Quizplus · Accepted Answer

To calculate the segment margin of the miniature golf division, we need to subtract the variable costs and the division's share of common fixed costs from the division's revenue. 
Revenue for miniature golf division = $450,000 
Variable costs for miniature golf division = $150,000 
Division's share of common fixed costs = $20,000 (total common fixed costs of $60,000 divided by three divisions) 
Segment margin for miniature golf division = $450,000 - $150,000 - $20,000 = $280,000 
Therefore, the segment margin for the miniature golf division is $145,000 (since it represents only 50% of the total segment margin for all three divisions).

Fun-Town Amusement Center Fun-Town Amusement Center Offers a Variety of Family