Combe Corporation has two divisions: Alpha and Beta. Data from the most recent month appear below: The company's common fixed expenses total $80,800. The break-even in sales dollars for Alpha Division is closest to:
A) $491,129
B) $143,478
C) $187,536
D) $260,580

Question

Combe Corporation has two divisions: Alpha and Beta. Data from the most recent month appear below:  The company's common fixed expenses total $80,800. The break-even in sales dollars for Alpha Division is closest to:
A) $491,129 
B) $143,478 
C) $187,536 
D) $260,580

Quizplus · Accepted Answer

Alpha Division:
Segment contribution margin = Segment sales − Segment variable expenses
= $190,000 − $58,900 = $131,100
Segment CM ratio = Segment contribution margin ÷ Segment sales
= $131,100 ÷ $190,000 = 0.69
Dollar sales for a segment to break even = Segment traceable fixed expenses ÷ Segment CM ratio
= $99,000 ÷ 0.69 = $143,478

Combe Corporation Has Two Divisions: Alpha and Beta