Reference no: EM132507131

The following information was taken from the segmented income statement of Restin, Inc., and the company's three divisions:

                                                     Restin, Inc.Los            Angeles Division           Bay Area Division            Central Valley Division

Revenues                              $976,000                      $272,000                        $307,000                       $397,000

Variable operating expenses       539,600                           149,600                        165,000                       225,000

Controllable fixed expenses          237,000                         74,000                          84,000                             79,000

Noncontrollable fixed expenses      87,000                            24,000                          29,000                           34,000

• In addition, the company incurred common fixed costs of $20,700.

Question 1: Assume that the Los Angeles division increases its promotion expense, a controllable fixed cost, by $18,100. As a result, revenues increased by $81,600. If variable expenses are tied directly to revenues, the new Los Angeles segment contribution margin is: