The following information pertains to the Midwest Division of Clearly Natural Company:

Net Sales $25,000
Variable Costs:
Cost of merchandise sold 7,200
Operating expenses 2,700
Fixed costs:
Controllable by segment manager 2,400
Controllable by others 1,000
Unallocated costs 600

The contribution controllable by a segment manager is .
A) $7,100
B) $7,700
C) $11,100
D) $12,700

The correct answer is option (d).

Explanation:

According to the scenario, the computation of the given data are as follows:

We can calculate the contribution margin by using following formula:

Contribution Margin = Sales - Variable cost - Operating expenses -Controllable fixed cost by manager

By putting the value in the formula, we get

Contribution Margin = $25,000 - $7,200 - $2,700 - $2,400

= $12,700

Form 1040

Explanation:

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