Differentiate between a traceable fixed cost and a common fixed cost. Give an example of each. What is a segment margin? How is it used to make “add or drop” segment decisions? Write the format for the segment margin income statement? Given the following sales numbers from a sales budget, complete the production budget for the first and second quarter. Assume the company likes to keep on hand an ending inventory at the end of each quarter equal to 30 percent of the next quarter’s sales. The beginning inventory balance at the beginning of the first quarter is 300 units. Year One 1st Qtr. 2nd Qtr. 3rd Qtr. Budgeted unit sales 1,000 2,000 4,000 Add: desired ending inventory Subtotal Less: units in beginning finished goods inventory Production in units
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