Orderly Headquarters, Inc The Company Incurred $1,500 as Fixed Costs

question 68

Essay

Orderly Headquarters, Inc. has two business segments: Commercial and Residential. The following data have been provided for the year ending December 31, 20XX.
$$\begin{array} { l l l } & \text { Commercial } & \text { Residential } \\\text { Service Revenue } & \$ 5,900 & \$ 8 , 500 \\\text { Variable costs } & \mathbf { 3 , 5 0 0 } & 5,400\end{array}$$ The company incurred $1,500 as fixed costs.
Requirements:
a) Prepare the income statement of Orderly Headquarters showing the contribution margin of each segment.
b) Calculate the contribution margin ratio of each segment. Which segment is more profitable and why?

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Definitions:

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The tendency for a group to make decisions that are more extreme than the initial inclination of its members, often after group discussions.

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