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

question 3

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. $\begin{array}{lr}\text { Division } A\\\text { Sales } & \$ 200,000 \\\text { Variable manufacturing costs } & 120,000 \\\text { Gross profit } & \$ 80,000 \\\text { Fixed expenses (direct and allocated) } & 100,000\\\text { Operating income (loss) }&\$(20,000) \end{array}$ What is A's divisional segment margin?

• A) $20,000 net loss
• B) $20,000 net income
• C) $40,000 net income
• D) $80,000 net income

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