Question

The marketing segment sales for Caterpillar, Inc., for a year follow:

Caterpillar, Inc.

Machinery and Engines Marketing Segment Sales

(in millions)

1		Building Construction Products	Cat Japan	Core Components	Earthmoving	Electric Power	Excavation	Large Power Systems	Logistics	Marine & Petroleum Power	Mining	Turbines
2	Sales	$2,217.00	$1,225.00	$1,234.00	$5,045.00	$2,847.00	$4,562.00	$2,885.00	$659.00	$2,132.00	$3,975.00	$3,321.00

In addition, assume the following information:

1		Building Construction Products	Cat Japan	Core Components	Earthmoving	Electric Power	Excavation	Large Power Systems	Logistics	Marine & Petroleum Power	Mining	Turbines
2	Variable cost of goods sold as a percent of sales	45.0%	55.0%	49.0%	51.0%	54.0%	52.0%	53.0%	50.0%	50.0%	52.0%	48.0%
3	Dealer commissions as a percent of sales	9.0%	11.0%	8.0%	8.0%	10.0%	6.0%	5.0%	10.0%	9.0%	7.0%	9.0%
4	Variable promotion expenses (in millions)	310.00	120.00	150.00	600.00	200.00	600.00	300.00	75.00	270.00	480.00	400.00

	Required:
a.	Use the sales information and the additional assumed information to prepare a contribution margin by segment report. Round to two decimal places. In addition, calculate the contribution margin ratio for each segment as a percentage, rounded to one decimal place. Refer to the Amount Descriptions list provided for the exact wording of the answer choices for text entries.
b.	Prepare a table showing the manufacturing margin, dealer commissions, and variable promotion expenses as a percent of sales for each segment. Round percents to one decimal place. Enter all amounts as positive numbers.
c.	Use the information in (a) and (b) to interpret the segment performance.

Answer 1