Wyrich Corporation has two divisions: Blue Division and Gold Division. The following report is for the most recent operating period: The Blue Division's break-even sales is closest to:
A) $518,750
B) $405,299
C) $381,481
D) $310,390

Question

Wyrich Corporation has two divisions: Blue Division and Gold Division. The following report is for the most recent operating period:  The Blue Division's break-even sales is closest to:
A) $518,750 
B) $405,299 
C) $381,481 
D) $310,390

Quizplus · Accepted Answer

Segment CM ratio = Segment contribution margin ÷ Segment sales
= $301,070 ÷ $391,000 = 0.770
Dollar sales for a segment to break even = Traceable fixed expenses ÷ Segment CM ratio
= $239,000 ÷ 0.770 = $310,390

Wyrich Corporation Has Two Divisions: Blue Division and Gold Division