CMA Intermediate · Management Accounting · Responsibility Accounting
A division of Kaveri Auto Ltd reports: sales Rs 20,00,000; variable costs Rs 11,00,000; controllable fixed costs Rs 3,00,000; non-controllable traceable fixed costs Rs 2,00,000; allocated corporate costs Rs 1,50,000. What is the divisional controllable margin?
The controllable margin is Rs 6,00,000, found by deducting variable costs of Rs 11,00,000 and controllable fixed costs of Rs 3,00,000 from sales of Rs 20,00,000. Non-controllable traceable and allocated corporate costs are excluded because the divisional manager cannot influence them.
- ARs 6,00,000Correct
- BRs 4,00,000
- CRs 9,00,000
- DRs 2,50,000
Explanation
Controllable margin = Sales 20,00,000 - variable 11,00,000 - controllable fixed 3,00,000 = 6,00,000. Deducting the traceable fixed cost gives 4,00,000, which is the segment margin, not the controllable margin.
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