Question

TB MC Qu. 4-56 The operations of Ranger Corporation are divided... The operations of Ranger Corporation are divided into the Stargate Division and the Cosmos Division. Projections for the next year are as follows: Toto Sales Less: Variable Costs Contribution Margin Less: Direct Fixed Costs Segment Margin Less: Allocated Common Costs Operating Income (Loss) Stargate Division $505,000 181,000 $324,000 151,000 $ 173,000 80,000 $ 93,000 Cosmos Division $362,000 201,000 $ 161,000 126,000 $ 35,000 56,000 $ (21,000) Total $ 867,000 382,000 $485,000 277,000 $208,000 136,000 $ 72,000 Operating income for Ranger Corporation, as a whole, if the Cosmos Division was dropped would be: O $37,000 $93,000 O $114,000 O $72,000

Answer 1

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	Correct option is: A. $37,000
	Workings:
	Segmented Income statement	Stargate Division
	Sales	$                             5,05,000
Less:	Variable expenses	$                             1,81,000
	Contribution margin	$                             3,24,000
Less:	Direct fixed expenses	$                             1,51,000
	Segment margin	$                             1,73,000
Less:	Common fixed expenses	$                             1,36,000
	Operating Income	$                                 37,000