Wyrich Corporation has two divisions: Blue Division and Gold Division. The following report is for the most recent operating period: The company's overall break-even sales is closest to:
A) $412,564
B) $506,409
C) $518,750
D) $106,186

Question

Wyrich Corporation has two divisions: Blue Division and Gold Division. The following report is for the most recent operating period:  The company's overall break-even sales is closest to:
A) $412,564 
B) $506,409 
C) $518,750 
D) $106,186

Quizplus · Accepted Answer

CM ratio = Contribution margin ÷ Sales
= $361,330 ÷ $522,000 = 0.692 (rounded)
Total fixed expenses = Total traceable fixed expenses + Common fixed expenses
= $286,000 + $73,080 = $359,080
Dollar sales to break even = Total fixed expenses ÷ CM ratio
= $359,080 ÷ 0.692 = $518,750 (using the unrounded CM ratio)

Wyrich Corporation Has Two Divisions: Blue Division and Gold Division