Rally Shoe Company is trying to decide whether or not to continue making bowling shoes. The following information is available for the segments.
Bowling Shoes Athletic Shoes Boots
Sales $120,000 $420,000 $360,000
Variable Costs 64,000 220,000 140,000
Contribution Margin 56,000 200,000 220,000
Direct Fixed Costs 45,000 70,000 90,000
Allocated Common Fixed costs 20,000 70,000 60,000
Net Income ($9,000) $60,000 $70,000
On what basis have the common fixed costs been allocated to the segments?
A. Not enough information to answer.
B. Number of employees.
D. Number of shoes sold.