2. The $48,000 in traceable fixed expenses in Exercise 12-7 is now partly
traceable and partly common. When we segment Minneapolis by mar-
ket, only $33,000 remains a traceable fixed expense. This amount
represents costs such as advertising and salaries of individuals that arise
because of the existence of the Medical and Dental markets. The re-
maining $15,000 ($48,000 – $33,000) becomes a common cost when
Minneapolis is segmented by market. This amount would include costs
such as the salary of the manager of the Minneapolis office that could
not be avoided by eliminating either of the two market segments.
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