Warburton Corporation has two divisions: Alpha and Beta.Data from the most recent month appear below: The company's common fixed expenses total $85, 690.The break-even in sales dollars for Alpha Division is closest to:
A)$273, 623
B)$162, 338
C)$420, 116
D)$217, 117

Question

Warburton Corporation has two divisions: Alpha and Beta.Data from the most recent month appear below:  The company's common fixed expenses total $85, 690.The break-even in sales dollars for Alpha Division is closest to:
A)$273, 623 
B)$162, 338 
C)$420, 116 
D)$217, 117

Quizplus · Accepted Answer

Alpha Division:
Segment contribution margin = Segment sales - Segment variable expenses
= $222, 000 - $51, 060 = $170, 940
Segment CM ratio = Segment contribution margin ÷ Segment sales
= $170, 940 ÷ $222, 000 = 0.77
Dollar sales for a segment to break even = Segment traceable fixed expenses ÷ Segment CM ratio
= $66, 410 ÷ 0.77 = $162, 338

Warburton Corporation Has Two Divisions: Alpha and Beta