Muckleroy Corporation has two divisions: Division K and Division L. Data from the most recent month appear below: Management has allocated common fixed expenses to the Divisions based on their sales. The break-even in sales dollars for Division K is closest to:
A) $244,103
B) $206,154
C) $174,359
D) $470,945

Question

Muckleroy Corporation has two divisions: Division K and Division L. Data from the most recent month appear below:  Management has allocated common fixed expenses to the Divisions based on their sales. The break-even in sales dollars for Division K is closest to:
A) $244,103 
B) $206,154 
C) $174,359 
D) $470,945

Quizplus · Accepted Answer

Segment CM ratio = Segment contribution margin ÷ Segment sales
= $193,440 ÷ $248,000 = 0.78
Dollar sales for a segment to break even = Segment traceable fixed expenses ÷ Segment CM ratio
= $136,000 ÷ 0.78 = $174,359

Muckleroy Corporation Has Two Divisions: Division K and Division L