Dig a Little Deeper, Inc. manufactures and sells two types of shovels: Edging and Trench. The following information was extracted from the company's accounting records from last period: Sales Revenue Product Costs Period Costs Edging $300,000 $220,000 $25,000 Trench $275,000 $150,000 $30,000 The Edging product line's variable product costs can be separated as follows: Direct Materials of $60,000, Direct Labor of $30,000, and Manufacturing Overhead of $35,000. The remaining product costs are traceable fixed manufacturing overhead costs. The period costs of the Edging line are made up of $15,000 of Sales Commissions, which is paid as a percentage of sales revenue, and $10,000 of arbitrarily allocated common fixed costs. Which of the following statements is incorrect? The Trench line has a contribution margin percentage of 60%. Of the fixed costs in the Trench line, $30,000 are traceable fixed costs and the remainder are arbitrarily allocated common fixed costs. The variable cost percentage of the Trench line is 40%.. The company's operating income for the period equals $150,000. The Edging line's performance should be analyzed based on a segment margin of $65,000. If the Trench line was expected to achieve a segment margin of $150,000, management would be pleased with the performance of the division. Traceable costs for the Trench line are $140,000.
Dig a Little Deeper, Inc. manufactures and sells two types of shovels: Edging and Trench. The following information was extracted from the company's accounting records from last period: The Edging product line's variable product costs can be separated as follows: Direct Materials of $60,000, Direct Labor of $30,000, and Manufacturing Overhead of $35,000. The remaining product costs are traceable fixed manufacturing overhead costs. The period costs of the Edging line are made up of $15,000 of Sales Commissions, which is paid as a percentage of sales revenue, and $10,000 of arbitrarily allocated common fixed costs: The Trench line has a contribution margin percentage of 60%. Of the fixed costs in the Trench line, $30,000 are traceable fixed costs and the remainder are arbitrarily allocated common fixed costs. Which of the following statements is incorrect? The variable cost percentage of the Trench line is 40%. The company's operating income for the period equals $150,000. The Edging line's performance should be analyzed based on a segment margin of $65,000. If the Trench line was expected to achieve a segment margin of $150,000, management would be pleased with the performance of the division. Traceable costs for the Trench line are $140,000 
