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Northern Company has the following information available for the past quarter: Division A Division B Division C Sales $250,000 $400,000 $350,000 Variable expenses 52% 30% 40% Fixed expenses controllable by division manager $60,000 $200,000 $175,000 Fixed expenses controllable by others $10,000 $5,000 $7,500 Unallocated expenses for all three divisions are $22,000. What is the contribution controllable by the division manager in Division C

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Answer:

Controllable contribution = $35,000

Explanation:

The controllable contribution of the divisional manager is  the difference between the sales revenue and the costs controllable by the manager. It is a metric to measure the performance of a divisional manager

sales revenue = $350,000

Variable expenses = 40%× 350,000

Controllable costs = (40%×350,000)+ 175,000= 315,000

Controllable contribution= $350,000 - 315,000 = 35,000

Controllable contribution = $35,000

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