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 Retail Division's break-even sales is closest to:
A) $369,408
B) $421,526
C) $584,815
D) $285,526

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 Retail Division's break-even sales is closest to:
A) $369,408 
B) $421,526 
C) $584,815 
D) $285,526

Quizplus · Accepted Answer

Segment contribution margin = Segment sales - Segment variable expenses
= $375,000 - $90,000 = $285,000
Segment CM ratio = Segment contribution margin ÷ Segment sales
= $285,000 ÷ $375,000 = 0.760
Dollar sales for a segment to break even = Traceable fixed expenses ÷ Segment CM ratio
= $217,000 ÷ 0.760 = $285,526

Bertie Corporation Has Two Divisions: Retail Division and Wholesale Division