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Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
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Phoniex University
Oct-2001 - Nov-2016
The Rial Company's income statement for June is given below:
| Â | Total | Division F | Division L |
| Sales | $429,500 | $242,000 | $187,500 |
| Variable expenses |
193,645 |
135,520 |
58,125 |
| Contribution margin | 235,855 | 106,480 | 129,375 |
| Traceable fixed expenses |
134,600 |
59,000 |
75,600 |
| Segment margin | 101,255 |
$47,480 |
$53,775 |
| Common fixed expenses | 42,000 | Â | Â |
| Net operating income |
$59,255 |
 |  |
|
If the sales in Division L increase by 35% while common fixed expenses in the company decrease by $10,500, the segment margin for Division L should: |
| Â | decrease by $34,781 |
| Â | decrease by $78,481 |
| Â | increase by $45,281 |
| Â | increase by $23,681 |
Â
Ans is C increase by $45,281
Â
| Partculars | Division L | Expected Division L | Change | Working Notes |
| Sales | 187,500.00 | 253,125.00 | 65,625.00 | 187,500*1.35 |
| Variable expenses | 58,125.00 | 78,468.75 | 20,343.75 | 58,125*1.35 |
| Contribution margin | 129,375.00 | 174,656.25 | 45,281.25 | Sales - Variable cost |
| Traceable fixed expenses | 75,600.00 | 75,600.00 | - | Â |
| Segment margin | 53,775.00 | 99,056.25 | 45,281.25 |
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