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 company's overall break-even sales is closest to:
A)$121, 759
B)$322, 457
C)$246, 550
D)$368, 309

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 company's overall break-even sales is closest to:
A)$121, 759 
B)$322, 457 
C)$246, 550 
D)$368, 309

Quizplus · Accepted Answer

CM ratio = Contribution margin ÷ Sales
= $245, 400 ÷ $396, 000 = 0.620 (rounded)
Total fixed expenses = Total traceable fixed expenses + Common fixed expenses
= $153, 000 + $75, 240 = $228, 240
Dollar sales to break even = Total fixed expenses ÷ CM ratio
= $228, 240 ÷ 0.620 = $368, 309 (using the unrounded CM ratio)

Keefe Corporation Has Two Divisions: Western Division and Eastern Division