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Full Version: Segment Margin Ratio
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Uses of Segment Margin Ratio

All Long run decisions are made on the basis of segment margin ratio.

<b>Calculation of segment margin Ratio</b>

Segment Margin/Net Sales*100

<u>Example</u>

Sales......................$50000
less variable cost..........30000
Contribution Margin.........20000
less traceable fixed cost...10000
Segment Margin..............10000


Segment Margin Ratio= 10000/50000*100

=20%

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Profitability measure used to evaluate the financial performance of a business segment (i.e., division, territory, product line). It equals segmental revenue less related product costs and traceable operating expenses attributable to that segment.