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Five operating departments

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Reference no: EM132052582

Sales revenue $4,580,000

Uncontrollable fixed costs traceable to the division 1,360,000

Allocated corporate overhead 590,000

Controllable fixed costs traceable to the division 1,120,000

Variable costs 40% of revenue

Required:

A. Compute the following for the Ohio Division:

1. Segment contribution margin. 4580000-40% of 4580000 = 2748000

2. Controllable profit margin. 2748000 - 1120000 - 590000 = 1038000

3. Segment profit margin. 1038000 - 1360000 = -322000

B. Which of the three preceding measures should be used when evaluating the Ohio Division as an investment of MWI's resources? Why?

C. Assume that management made the decision to use a segmented income statement that reflected Ohio's five operating departments. Would all $1,120,000 of the controllable fixed costs be easily traced to the departments? Briefly explain.

Reference no: EM132052582

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