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 Wholesale Division's break-even sales in dollars is closest to:
A)$164,286
B)$217,686
C)$273,286
D)$469,884

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 Wholesale Division's break-even sales in dollars is closest to:
A)$164,286 
B)$217,686 
C)$273,286 
D)$469,884

Quizplus · Accepted Answer

Segment contribution margin = Segment sales - Segment variable expenses
= $267,000 - $80,100 = $186,900
Segment CM ratio = Segment contribution margin ÷ Segment sales
= $186,900 ÷ $267,000 = 0.700
Dollar sales for a segment to break even = Traceable fixed expenses ÷ Segment CM ratio
= $115,000 ÷ 0.700 = $164,286

Rollison Corporation Has Two Divisions: Retail Division and Wholesale Division