Clemmens Corporation Has Two Major Business Segments: Consumer and Commercial

question 70

Multiple Choice

Clemmens Corporation has two major business segments: Consumer and Commercial. Data for the segments and for the company for August appear below: In addition, common fixed expenses totaled $265,000 and were allocated as follows: $135,000 to the Consumer business segment and $130,000 to the Commercial 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)$88,000
• B)$353,000
• C)$476,000
• D)-$177,000

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Definitions:

Simultaneous Consumption

A situation where a good or service can be consumed by more than one individual at the same time without reducing the quantity available to others.

Monopoly Power

The ability of a monopoly to set or influence prices within the market due to the lack of competitive pressures.

Net Social Benefits

The total benefits from an action or policy minus the total costs, considering both direct and indirect effects on society.

Purely Competitive Firms

Companies that operate in a market where there are many buyers and sellers trading identical products so that each buyer and seller is a price taker.