Segment margins Following is the information on Paragon Company’s three product lines:
|
|
PRODUCT LINE |
||
|
|
1 |
2 |
3 |
|
Revenue |
$7,160,000 |
$1,900,000 |
$4,200,000 |
|
Variable cost percentage of sales |
60% |
50% |
40% |
|
Other costs |
$859,200 |
$237,500 |
$693,000 |
|
Allocated avoidable corporate costs |
$349,000 |
$156,000 |
$698,000 |
|
Allocated unavoidable corporate costs |
$570,800 |
$206,500 |
$24,000 |
Required
(a) Construct a segment margin statement for Paragon Company.
(b) Explain why the segment margins reported for an organization unit must be interpreted carefully.