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-   -   Segment Margins (https://www.askmehelpdesk.com/showthread.php?t=609765)

  • Nov 5, 2011, 05:47 PM
    Imhiding
    Segment Margins
    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

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