When using data from a segmented income statement, the dollar sales for the company to break even overall is equal to:
A)(Allocated fixed expenses + Traceable fixed expenses) ÷ Overall CM ratio
B)(Traceable fixed expenses + Common fixed expenses) ÷ Overall CM ratio
C)(Non-traceable fixed expenses + Common fixed expenses) ÷ Overall CM ratio
D)(Traceable fixed expenses) ÷ Overall CM ratio

Question

Quizplus · Accepted Answer

The dollar sales for the company to break even overall can be calculated by dividing the total fixed expenses by the overall contribution margin ratio. The contribution margin ratio is the ratio of the total contribution margin to total sales. From the given options, the best choice is (B) because it includes both traceable and common fixed expenses. Therefore, the formula is: (Traceable fixed expenses + Common fixed expenses) ÷ Overall CM ratio.

When Using Data from a Segmented Income Statement, the Dollar