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Hamilton, Inc

Accounting

Hamilton, Inc. has two divisions, Parker and Blaine. Following Is the Income statement for the previous year. 
Parker Blaine Sales $751,500 $751,500 Variable Costs 518,225 638,775 Contribution Margin $233,275 $112,725 Fixed Costs 152,800 152,800 Profit Margin $ 80,475  $(40,075)  
Of the total fixed costs, $300,000 are common fixed costs that are allocated equally between the divisions. What would Hamilton's profit margin be if Blaine were dropped? 
Multiple Choice $40,400 S(5.600) 
 

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So, the correct option is 3rd "$69,525".


Workings:

Income Statement
           
  Total Company Parker Blaine    
  Amount Amount Amount    
Sales $751,500  $751,500       
Variable cost $518,225  $518,225       
Contribution margin $233,275  $233,275  $0     
Traceable fixed cost ((152800+152800)-300000)/2) $2,800  $2,800       
Market segment margin $230,475  $230,475  $0     
Common fixed expenses not traceable to market $300,000         
Office segment margin ($69,525)        

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