US CMA Part 1 · Chapter 3 · Question 17 of 30
The Eastern segment of a company reports sales of $900,000, variable costs of $540,000, traceable fixed costs of $210,000 and an allocation of common corporate costs of $80,000. What is the segment margin used to evaluate the segment's contribution to company profit?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) $150,000
Explanation
Contribution margin = $900,000 - $540,000 = $360,000. Segment margin = contribution margin - traceable fixed costs = $360,000 - $210,000 = $150,000. Common costs are not deducted because they would continue even if the segment were eliminated.
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