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