Keefe 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 Eastern Division's break-even sales is closest to:
A)$104, 872
B)$368, 309
C)$75, 641
D)$172, 103

Question

Keefe 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 Eastern Division's break-even sales is closest to:
A)$104, 872 
B)$368, 309 
C)$75, 641 
D)$172, 103

Quizplus · Accepted Answer

Segment CM ratio = Segment contribution margin ÷ Segment sales
= $93, 600 ÷ $120, 000 = 0.780
Dollar sales for a segment to break even = Traceable fixed expenses ÷ Segment CM ratio
= $59, 000 ÷ 0.780 = $75, 641

Keefe Corporation Has Two Divisions: Western Division and Eastern Division