Carriveau Corporation has two divisions: Consumer Division and Business Division. The following data are for the most recent operating period: The company's common fixed expenses total $63,360.
The Business Division's break-even sales is closest to:
A) $488,153
B) $218,355
C) $266,263
D) $182,895

Question

Carriveau Corporation has two divisions: Consumer Division and Business Division. The following data are for the most recent operating period:  The company's common fixed expenses total $63,360.
The Business Division's break-even sales is closest to:
A) $488,153 
B) $218,355 
C) $266,263 
D) $182,895

Quizplus · Accepted Answer

Segment contribution margin = Segment sales - Segment variable expenses
= $245,000 - $58,800 = $186,200
Segment CM ratio = Segment contribution margin ÷ Segment sales
= $186,200 ÷ $245,000 = 0.760
Dollar sales for a segment to break even = Traceable fixed expenses ÷ Segment CM ratio
= $139,000 ÷ 0.760 = $182,895

Carriveau Corporation Has Two Divisions: Consumer Division and Business Division