Cervetti Corporation Has Two Major Business Segments-East and West

question 153

Multiple Choice

Cervetti Corporation has two major business segments-East and West. In July, the East business segment had sales revenues of $220,000, variable expenses of $125,000, and traceable fixed expenses of $29,000. During the same month, the West business segment had sales revenues of $890,000, variable expenses of $472,000, and traceable fixed expenses of $169,000. The common fixed expenses totaled $246,000 and were allocated as follows: $123,000 to the East business segment and $123,000 to the West business segment. The contribution margin of the West business segment is:

• A)$418,000
• B)-$57,000
• C)$513,000
• D)$66,000

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Definitions:

Unemployed Workers

Individuals who are capable of working and willing to work but are unable to find suitable employment.

Discretionary Fiscal Policy

Government policy actions, such as changes in taxes and spending, aimed at stabilizing the economy that are initiated at the discretion of the government.

Stagflation

A condition of slow economic growth and relatively high unemployment accompanied by rising prices, or inflation, challenging the usual economic assumptions.

Permanent Income

A theory suggesting that an individual's consumption choices are based on their long-term income expectations rather than their current income.