The Following Information Pertains to the East Division of Saturn $\begin{array} { l } \text { NET SALES}&\$21,000 \\\end{array}$

question 3

Multiple Choice

The following information pertains to the East Division of Saturn Company:
$\begin{array} { l } \text { NET SALES}&\$21,000 \\\end{array}$

Variable costs:
$\begin{array} { l } \text { Cost of merchandise sold}& 10,300\\ \text {Operating expenses }&3,700 \\\end{array}$

Fixed costs:
$\begin{array} { l } \text {Controllable by segment manager }& 2,400\\ \text { Controllable by others}&1,000 \\ \text { unallocated costs}&600 \\\end{array}$

The contribution margin of the East Division is ________.

• A) $7,000
• B) $7,700
• C) $8,000
• D) $10,700

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Definitions:

Opportunity Cost

The cost of foregoing the next best alternative when making a decision.

After Tax Profits

The net income a company retains after all its tax obligations have been settled.

Expected Cost

The forecasted cost of an action or decision, taking into account all known risks and uncertainties.

Expected Value

A statistical concept that calculates the average outcome of a random event when the process is repeated many times.