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The following information was taken from the segmented income statement of Restin, Inc., and the company's three divisions: Restin, Inc. Los Angeles Division Bay Area
The following information was taken from the segmented income statement of Restin, Inc., and the company's three divisions:
Restin, Inc. | Los Angeles Division | Bay Area Division | Central Valley Division | ||||||||||
Revenues | $ | 1,072,000 | $ | 304,000 | $ | 339,000 | $ | 429,000 | |||||
Variable operating expenses | 597,200 | 167,200 | 185,000 | 245,000 | |||||||||
Controllable fixed expenses | 249,000 | 78,000 | 88,000 | 83,000 | |||||||||
Noncontrollable fixed expenses | 99,000 | 28,000 | 33,000 | 38,000 | |||||||||
In addition, the company incurred common fixed costs of $21,900. Assume that the Los Angeles division increases its promotion expense, a controllable fixed cost, by $21,700. As a result, revenues increased by $45,600. If variable expenses are tied directly to revenues, the new Los Angeles segment profit margin is:
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