Rollison Corporation has two divisions: Retail Division and Wholesale Division.The following data are for the most recent operating period: The common fixed expenses of the company are $76, 300. The company's overall break-even sales in dollars is closest to:
A)$469, 884
B)$364, 286
C)$105, 599
D)$316, 996

Question

Rollison Corporation has two divisions: Retail Division and Wholesale Division.The following data are for the most recent operating period:  The common fixed expenses of the company are $76, 300. The company's overall break-even sales in dollars is closest to:
A)$469, 884 
B)$364, 286 
C)$105, 599 
D)$316, 996

Quizplus · Accepted Answer

Contribution margin = Sales - Variable expenses
= $545, 000 - $146, 820 = $545, 000
CM ratio = Contribution margin ÷ Sales
= $398, 180 ÷ $545, 000 = 0.731 (rounded)
Total fixed expenses = Total traceable fixed expenses + Common fixed expenses
= $267, 000 + $76, 300 = $343, 300
Dollar sales to break even = Total fixed expenses ÷ CM ratio
= $343, 300 ÷ 0.731 = $469, 884 (using the unrounded CM ratio)

Rollison Corporation Has Two Divisions: Retail Division and Wholesale Division