Use the following to answer questions 43-47:

The following information was taken from the segmented income statement of Restin, Inc., and the company's three divisions:

		Los	Bay	Central
	Restin,	Angeles	Area	Valley
	Inc.	Division	Division	Division
Revenues	$750,000	$200,000	$235,000	$325,000
Variable operating expenses	410,000	110,000	120,000	180,000
Controllable fixed expenses	210,000	65,000	75,000	70,000
Noncontrollable fixed expenses	60,000	15,000	20,000	25,000

In addition, the company incurred common fixed costs of $18,000.

43. Bay Area's segment profit margin is:

A. $14,000.

B. $18,000.

C. $20,000.

D. $40,000.

E. $115,000.

Answer: C

44. The profit margin controllable by the Central Valley segment manager is:

A. $32,000.

B. $44,000.

C. $50,000.

D. $75,000.

E. $145,000.

Answer: D

45. Assuming use of a responsibility accounting system, which of the following amounts should be used to evaluate the performance of the Los Angeles division manager?

A. $4,000.

B. $8,000.

C. $10,000.

D. $25,000.

E. $90,000.

Answer: D

46. Which of the following amounts should be used to evaluate whether Restin, Inc., should continue to invest company resources in the Los Angeles division?

A. $4,000.

B. $8,000.

C. $10,000.

D. $25,000.

E. $90,000.

Answer: C

47. Assume that the Los Angeles division increases its promotion expense, a controllable fixed cost, by $10,000. As a result, revenues increase by $50,000. If variable expenses are tied directly to revenues, the new Los Angeles segment profit margin is:

A. $12,500.

B. $22,500.

C. $32,500.

D. $50,000.

E. $60,000.

Answer: B

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