When using data from a segmented income statement, the dollar sales for a segment to break even is equal to:
A) Traceable fixed expenses ÷ Segment CM ratio
B) Common fixed expenses ÷ Segment CM ratio
C) (Traceable fixed expenses + Common fixed expenses) ÷ Segment CM ratio
D) Non-traceable fixed expenses ÷ Segment CM ratio

Question

Quizplus · Accepted Answer

To calculate the dollar sales for a segment to break even, we need to use the formula: Break-even sales (in dollars) = Total fixed expenses ÷ CM ratio. The total fixed expenses for a segment are the traceable fixed expenses. Therefore, we can use the formula Break-even sales (in dollars) = Traceable fixed expenses ÷ Segment CM ratio to calculate the answer.

When Using Data from a Segmented Income Statement, the Dollar