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 company's overall break-even sales is closest to:
A) $398,837
B) $288,296
C) $488,153
D) $89,316

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 company's overall break-even sales is closest to:
A) $398,837 
B) $288,296 
C) $488,153 
D) $89,316

Quizplus · Accepted Answer

11eacbfc_c6e5_137e_8ffe_6beea19f6d0c_TB7552_00 Contribution margin = Sales - Variable expenses
= $576,000 - $161,410 = $576,000
CM ratio = Contribution margin ÷ Sales
= $414,590 ÷ $576,000 = 0.720 (rounded)
Total fixed expenses = Total traceable fixed expenses + Common fixed expenses
= $288,000 + $63,360 = $351,360
Dollar sales to break even = Total fixed expenses ÷ CM ratio
= $351,360 ÷ 0.720 = $488,153 (using the unrounded CM ratio)

Carriveau Corporation Has Two Divisions: Consumer Division and Business Division