Bertie Corporation has two divisions: Retail Division and Wholesale Division. The following data are for the most recent operating period: The common fixed expenses of the company are $103,360.
The company's overall break-even sales is closest to:
A) $153,526
B) $431,289
C) $526,014
D) $584,815

Question

Bertie Corporation has two divisions: Retail Division and Wholesale Division. The following data are for the most recent operating period:  The common fixed expenses of the company are $103,360.
The company's overall break-even sales is closest to:
A) $153,526 
B) $431,289 
C) $526,014 
D) $584,815

Quizplus · Accepted Answer

Contribution margin = Sales - Variable expenses
= $608,000 - $185,530 = $608,000
CM ratio = Contribution margin ÷ Sales
= $422,470 ÷ $608,000 = 0.695 (rounded)
Total fixed expenses = Total traceable fixed expenses + Common fixed expenses
= $303,000 + $103,360 = $406,360
Dollar sales to break even = Total fixed expenses ÷ CM ratio
= $406,360 ÷ 0.695 = $584,815 (using the unrounded CM ratio)

Bertie Corporation Has Two Divisions: Retail Division and Wholesale Division