Pevy Corporation has two divisions: Southern Division and Northern Division.The following data are for the most recent operating period: The common fixed expenses have been allocated to the divisions on the basis of sales. The Northern Division's break-even sales is closest to:
A)$104, 400
B)$131, 900
C)$86, 250
D)$286, 163

Question

Pevy Corporation has two divisions: Southern Division and Northern Division.The following data are for the most recent operating period:  The common fixed expenses have been allocated to the divisions on the basis of sales. The Northern Division's break-even sales is closest to:
A)$104, 400 
B)$131, 900 
C)$86, 250 
D)$286, 163

Quizplus · Accepted Answer

Segment contribution margin = Segment sales - Segment variable expenses
= $132, 000 - $26, 400 = $105, 600
Segment CM ratio = Segment contribution margin ÷ Segment sales
= $105, 600 ÷ $132, 000 = 0.800
Dollar sales for a segment to break even = Traceable fixed expenses ÷ Segment CM ratio
= $69, 000 ÷ 0.800 = $86, 250

Pevy Corporation Has Two Divisions: Southern Division and Northern Division