Valley Inc. has three divisions, Almond, Grover and Oak. Following is the income statement for the previous year: Of the fixed costs, $300,000 is for corporate costs and is allocated equally to the three divisions.
a. How much does Grover Division have in direct fixed costs?
b. What is Grover Division's segment margin?
c. What would Valley's profit margin be if Grover Division were dropped?

Question

Valley Inc. has three divisions, Almond, Grover and Oak. Following is the income statement for the previous year:  Of the fixed costs, $300,000 is for corporate costs and is allocated equally to the three divisions.
a. How much does Grover Division have in direct fixed costs?
b. What is Grover Division's segment margin?
c. What would Valley's profit margin be if Grover Division were dropped?

Quizplus · Accepted Answer

The Answer of Valley Inc. has three divisions, Almond, Grover and Oak. Following is the income statement for the previous year:  Of the fixed costs, $300,000 is for corporate costs and is allocated equally to the three divisions.
a. How much does Grover Division have in direct fixed costs?
b. What is Grover Division's segment margin?
c. What would Valley's profit margin be if Grover Division were dropped?