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Imhiding
Nov 5, 2011, 05:47 PM
Example Setup:
Revenue $600,000
Contribution Margin Percentage 45%
Fixed Costs controlled by division managers $200,000.

If I am to prepare a segment margin statement:
Revenue: 600,000 - Variable costs = varaiable margin. If I do not have any variable costs, then would my contribuition margin be 600,000? Where does the Contribution Margin percentage come in?

To get a segment margin ratio, I would:

Revenue - variable costs = contribution margin
Contribution margin-fixed costs= segment margin
Segment margin - indirect costs = operating profit
Segment ratio = segment margin/net sales.

If I only have revenue, contribution margin percentage and fixed costs, how do I get just the contribution margin and a division margin?

I am lost. Can someone please explain what I am missing?

Thanks