Hogans Corporation has two divisions: Delta and Echo.Data from the most recent month appear below: The company's common fixed expenses total $64, 090.The break-even in sales dollars for Echo Division is closest to:
A)$250, 143
B)$387, 059
C)$173, 469
D)$304, 265

Question

Hogans Corporation has two divisions: Delta and Echo.Data from the most recent month appear below:  The company's common fixed expenses total $64, 090.The break-even in sales dollars for Echo Division is closest to:
A)$250, 143 
B)$387, 059 
C)$173, 469 
D)$304, 265

Quizplus · Accepted Answer

Echo Division:
Segment contribution margin = Segment sales - Segment variable expenses
= $221, 000 - $112, 710 = $108, 290
Segment CM ratio = Segment contribution margin ÷ Segment sales
= $108, 290 ÷ $221, 000 = 0.49
Dollar sales for a segment to break even = Segment traceable fixed expenses ÷ Segment CM ratio
= $85, 000 ÷ 0.49 = $173, 469

Hogans Corporation Has Two Divisions: Delta and Echo