Jemmott Corporation has two divisions: Western Division and Eastern Division. The following report is for the most recent operating period: The common fixed expenses have been allocated to the divisions on the basis of sales.
The Western Division's break-even sales is closest to:
A) $128,788
B) $233,364
C) $177,212
D) $358,929

Question

Jemmott Corporation has two divisions: Western Division and Eastern Division. The following report is for the most recent operating period:  The common fixed expenses have been allocated to the divisions on the basis of sales.
The Western Division's break-even sales is closest to:
A) $128,788 
B) $233,364 
C) $177,212 
D) $358,929

Quizplus · Accepted Answer

Segment CM ratio = Segment contribution margin ÷ Segment sales
= $124,080 ÷ $188,000 = 0.660
Dollar sales for a segment to break even = Traceable fixed expenses ÷ Segment CM ratio
= $85,000 ÷ 0.660 = $128,788

Jemmott Corporation Has Two Divisions: Western Division and Eastern Division