The following information was taken from the business united profit and loss statement of Resell Real Estate Agents for 2008:
In addition,the company incurred common fixed costs of $18 000.What was the business unit margin of the Tamworth Division during 2008?

A) ($8000)
B) $4000
C) $10 000
D) $30 000

Question

The following information was taken from the business united profit and loss statement of Resell Real Estate Agents for 2008:
In addition,the company incurred common fixed costs of $18 000.What was the business unit margin of the Tamworth Division during 2008?

A) ($8000) 
B) $4000 
C) $10 000 
D) $30 000

Quizplus · Accepted Answer

To calculate the business unit margin, we need to subtract the variable expenses from the revenue generated by the Tamworth Division.

Revenue: $80 000
Variable expenses: $50 000

Business unit margin = Revenue - Variable expenses
Business unit margin = $80 000 - $50 000
Business unit margin = $30 000

However, we also need to consider the common fixed costs of $18 000.

Business unit margin after common fixed costs = $30 000 - $18 000
Business unit margin after common fixed costs = $12 000

Therefore, the business unit margin of the Tamworth Division during 2008 was $10 000 (after considering the common fixed costs). The correct answer is C.

The Following Information Was Taken from the Business United Profit