HELP!!!! Managerial Word Problem

Question

Consider the following table and prepare a segmented income statement on paper. Use your income statement to answer the following questions:

What is the contribution margin for Product A?

What is the segment margin for Product A?

What is the total segment margin?

What is net income?


Product A Product B
Units sold 4300 4000
Selling price per unit $18 $24
Variable costs per unit $9 $9
Direct fixed costs per product line $1935 $3000
Allocated common fixed costs per product line $3096 $3840

Answer 1

Contribution Margin (Product A) = (Units sold x Selling Price) - (Variable Cost per unit x units sold)

Segment Margin (Product A) = Contribution Margin (Product A)  - (Direct Fixed Costs)

Total Segment Margin = Segment Margin Product A + Segment Margin Product B

Net Income = Total Segment Margin - Total Allocated Fixed Costs