Consider the Following Portion of a Segmented Income Statement for the Year

question 39

Multiple Choice

Consider the following portion of a segmented income statement for the year just ended.Assume fixed expenses of Division A include $60,000 of direct expenses and that the discontinuance of the department will not affect the sales of the other departments or reduce the common expenses. $$\begin{array} { l r } &\text { Division } A\\\text { Sales } & \$ 200,000 \\\text { Variable manufacturing costs } & 120,000 \\\text { Gross profit } & \$ 80,000 \\\text { Fixed expenses (direct and allocated) } & 100,000 \\\text { Operating income (loss) } & \$ ( 20,000 ) \end{array}$$ What is A's divisional segment margin?

• A) ($10,000)
• B) $10,000
• C) $40,000
• D) $100,000

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