Denner Corporation Has Two Divisions, a and B

Multiple Choice

Denner Corporation has two divisions, A and B. The following data pertain to operations in October: If common fixed expenses were $31,000, total fixed expenses were:

A) $31,000
B) $62,000
C) $93,000
D) $52,000
Division A:
Variable expenses = Variable expense ratio × Sales
= 0) 70 × $90,000 = $63,000
Division B:
Variable expenses = Variable expense ratio × Sales
= 0) 60 × $150,000 = $90,000
Division A:
Segment margin = Contribution margin - Traceable fixed expenses
$2,000 = $27,000 - Traceable fixed expenses
Traceable fixed expenses = $27,000 - $2,000 = $25,000
Division B:
Segment margin = Contribution margin - Traceable fixed expenses
$23,000 = $60,000 - Traceable fixed expenses
Traceable fixed expenses = $60,000 - $23,000 = $37,000
Total fixed expenses = Traceable fixed expenses + Common fixed expenses
= $62,000 + $31,000 = $93,000