Rollison 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 $76,300. The Retail Division's break-even sales in dollars is closest to:
A)$469,884
B)$200,000
C)$251,211
D)$300,395

Question

Rollison 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 $76,300. The Retail Division's break-even sales in dollars is closest to:
A)$469,884 
B)$200,000 
C)$251,211 
D)$300,395

Quizplus · Accepted Answer

Segment contribution margin = Segment sales - Segment variable expenses
= $278,000 - $66,720 = $211,280
Segment CM ratio = Segment contribution margin ÷ Segment sales
= $211,280 ÷ $278,000 = 0.760
Dollar sales for a segment to break even = Traceable fixed expenses ÷ Segment CM ratio
= $152,000 ÷ 0.760 = $200,000

Rollison Corporation Has Two Divisions: Retail Division and Wholesale Division