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6 May, 08:32

AirStep Shoe Company has two retail stores, one in Gainesville and the other in Orlando. The Gainesville store had sales of $100,000, a contribution margin of 35 percent, and a segment margin of $14,000. The company's two stores have total sales of $250,000, contribution margin of 32 percent, and a total segment margin of $31,000. The contribution margin for the Orlando store must have been:

A. $65,000

B. $170,000

C. $105,000

D. $45,000

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  1. 6 May, 10:55
    0
    D. $45,000

    Explanation:

    The computation of the contribution margin for the Orlando store is

    = Total sales * contribution margin percentage - Gainesville sales * contribution margin percentage

    = $250,000 * 32% - $100,000 * 35%

    = $80,000 - $35,000

    = $45,000

    Contribution margin is come from deducting Gainesville contribution margin from the total contribution margin
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