Phong Corporation has two divisions: Consumer Division and Business Division.The following data are for the most recent operating period: The company's common fixed expenses total $102,340. The Business Division's break-even sales is closest to:
A)$376,077
B)$317,885
C)$244,872
D)$584,762

Question

Phong Corporation has two divisions: Consumer Division and Business Division.The following data are for the most recent operating period:  The company's common fixed expenses total $102,340. The Business Division's break-even sales is closest to:
A)$376,077 
B)$317,885 
C)$244,872 
D)$584,762

Quizplus · Accepted Answer

Segment contribution margin = Segment sales - Segment variable expenses
= $335,000 - $73,700 = $261,300
Segment CM ratio = Segment contribution margin ÷ Segment sales
= $261,300 ÷ $335,000 = 0.780
Dollar sales for a segment to break even = Traceable fixed expenses ÷ Segment CM ratio
= $191,000 ÷ 0.780 = $244,872

Phong Corporation Has Two Divisions: Consumer Division and Business Division