Question

Joseph Company operates three divisions, X, Y, and Z. The following
information is available for the most recent month:

Joseph Company:
Sales revenue .............. $700,000
Segment margin ............. $239,000
Net income ................. $125,000

Division X:
Sales revenue .............. $200,000
Contribution margin ........ $140,000
Segment margin ............. $109,000

Division Y:
Variable costs ............. 70% of sales

Division Z:
Variable costs ............. $118,000
Traceable fixed costs ...... $ 56,000
Contribution margin ........ 60% of sales

Calculate the total fixed costs incurred by Joseph Company during
the most recent month.

Please label the answer as answer=-----------

Answer 1

Ams:-

Given information is related to Joseph company which is operating in three divisions.

Overall company

Sales revenue = $700,000

Segment margin =$239,000

Net Income. =$125,000

Here the difference between net income and segment margin may be unavoidable fixed cost and the value is ($239,000-$125,000) $114,000.

Segment margin is nothing but profit of the company before diduction of unavailable fixed cost.

Total fixed includea avoidable and unavoidable fixed costs

Now the calculation related to fixed cost

Divisions

Particulars	Div x	Div Y	Div Z
Sales (a)	$200,000	$205,000 (By diducting divisions sales from tatal sales)	$295,000 (b+c)
Variable cost(b)	$60,000	$143,500 (Given 70% on salea	$118,000 (Given)
Contribution (c)=(a-b)	$140,000 (Given)	$61,500	$177,000 (Given 60% on sales is then 40% is about variable cost then $118000/40*100)
Fixed cost (d)	$31,000	$52,500 (d= c-e)	$56,000 (Given)
Segment margin ( e)=(c-d)	$109,000 (Given)	$9,000 (By diducting divisions margin from total segment margin)	$121,000

So from the above table we got fixed cost values we may treat it as avoidable fixed cost

Total avoidable fixed cost= total of divisions fixed cost

I.e..,. =$31,000+$52,500+$56,000

=$139,500

Therefore total fixed cost = avoidable fixed cost+unavoidable fixed cost

=$139,500+$114,000

=$253,500