Tubaugh Corporation Has Two Major Business Segments--East and West

question 233

Multiple Choice

Tubaugh Corporation has two major business segments--East and West. In December, the East business segment had sales revenues of $690,000, variable expenses of $352,000, and traceable fixed expenses of $104,000. During the same month, the West business segment had sales revenues of $140,000, variable expenses of $56,000, and traceable fixed expenses of $24,000. The common fixed expenses totaled $162,000 and were allocated as follows: $89,000 to the East business segment and $73,000 to the West business segment.A properly constructed segmented income statement in a contribution format would show that the net operating income of the company as a whole is:

• A) $294,000
• B) $422,000
• C) $132,000
• D) $(30,000)

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Definitions:

Factory Depreciation

The allocation of the cost of a manufacturing or production plant and its equipment over their useful lives, reflecting the usage and wear and tear of fixed assets.

Variable Overhead

Indirect production costs that fluctuate with the level of output, such as utilities or materials.

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity level, allowing for more accurate cost control.

Monthly Sales

The total revenue generated from sales within a month, often tracked to assess business performance.