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