Maplecrest’s Westgate clinic: revenue 600,000, variable costs 380,000, direct (avoidable) fixed costs 170,000, and an allocated share of head-office cost of 90,000. Compute Westgate’s contribution margin, its segment margin, and its result on the full-cost statement (a loss is negative).
Maplecrest’s Westgate clinic: revenue 600,000, variable costs 380,000, direct (avoidable) fixed costs 170,000, and an allocated share of head-office cost of 90,000. Compute Westgate’s contribution margin, its segment margin, and its result on the full-cost statement (a loss is negative).
Answer
Westgate contribution margin → 220000 · Westgate segment margin → 50000 · Westgate full-cost result → -40000
Cells - Westgate contribution margin · ±0 - Westgate segment margin · ±0 - Westgate full-cost result · ±0 Contribution margin = 600,000 − 380,000 = 220,000. Segment margin = 220,000 − 170,000 = 50,000 — the relevant measure. Full-cost result = 50,000 − 90,000 = −40,000, which includes an allocation that would not disappear.
Hermanson Vol 2 ch 22 (add or eliminate a segment); Heisinger & Hoyle §7.3 (the keep / drop / difference panels); OpenStax Accounting v2 §10.4; Maplecrest is the course’s own