W5 A2 1 - 3

1. Devlin Company has two divisions, C and D. The overall company contribution margin ratio is 30%, with sales in the two divisions totaling $500,000. If variable expenses are $300,000 in Division C, and if Division C's contribution margin ratio is 25%, then sales in Division D must be: A $50,000 B $100,000 C $150,000 D $200,000

2.

Toxemia Salsa Company manufactures five flavors of salsa. Last year, Toxemia generated net operating income of $40,000. The following information was taken from last year's income statement segmented by flavor (brackets indicate a negative amount): Wimpy Mild Medium Hot Atomic

Contribution margin $(2000) $45,000 $35,000 $50,000 $162,000

Segment margin $(16,000) $(5000) $7000 $10,000 $94,000

Segment margin less allocated common fixed expenses

$(26,000) $(15,000) $(3000) $0 $84,000 Toxemia expects similar operating results for the upcoming year. If Toxemia wants to maximize its profitability in the upcoming year, which flavor or flavors should Toxemia discontinue? A no flavors should be discontinued B wimpy C wimpy and mild D wimpy, mild, and medium

3. Younie Corporation has two divisions: the South Division and the West Division. The corporation's net operating income is $26,900. The South Division's divisional segment margin is $42,800 and the West Division's divisional segment margin is $29,900. What is the amount of the common fixed expense not traceable to the individual divisions? A $56,800 B $69,700 C $72,700 D $45,800