Question

Fenway Market has two stores, F and G. During February, Store F had a segment margin of $10,000, traceable fixed expenses of $26,000, and variable expenses equal to 55% of sales. Fenway Market as a whole had a combined segment margin of 15%, a contribution margin ratio of 40%, and total sales of $180,000. Based on this information, the traceable fixed expenses in Store G were:

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Answer 1

• All working forms part of the answer
• First of all, we need to calculate remaining details of Store F from available details of Store F, like:

A	Segment Margin	$                10,000
B	Traceable Fixed expense	$                26,000
C = A+B	Contribution margin	$                36,000
D = C/45%	Total Sales	$                80,000
E = D x 55%	Variable Expenses	$                44,000

• From above details of Store F, and given combined total details, we can calculate details of Store G:

	Combined total		Store F		Store G
Sales	$              180,000	Given	$                   80,000	Calculated above	$            100,000	180000 – 80000
Contribution margin	$                72,000	180000 x 40%	$                   36,000	Calculated above	$              36,000	72000 - 36000
Segment Margin	$                27,000	180000 x 15%	$                   10,000	Given	$              17,000	27000 – 10000
Traceable Fixed expense	$                45,000	72000 – 27000	$                   26,000	Given	$              19,000 [Answer]	45000 – 26000

• Answer: Traceable Fixed Expense in Store G = $ 19,000