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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.

C. Sales.

D. Number of shoes sold.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M943106

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