Kadle Corporation has two divisions: Division L and Division Q. Data from the most recent month appear below: The break-even in sales dollars for Division Q is closest to:
A)$262,742
B)$506,955
C)$153,030
D)$199,121

Question

Kadle Corporation has two divisions: Division L and Division Q. Data from the most recent month appear below:  The break-even in sales dollars for Division Q is closest to:
A)$262,742 
B)$506,955 
C)$153,030 
D)$199,121

Quizplus · Accepted Answer

To find the break-even point, we need to calculate the contribution margin ratio, which is contribution margin divided by sales.

For Division Q: 
Contribution margin = Sales - Variable Costs 
= $650,000 - ($300,000 + $120,000 + $95,000) 
= $135,000

Contribution margin ratio = $135,000 / $650,000 
= 0.2077

Using the formula for break-even in sales dollars: 
Break-even = Fixed Costs / Contribution margin ratio

For Division Q: 
Break-even = $51,000 / 0.2077 
= $245,738

Therefore, the closest answer choice is C) $153,030.

Kadle Corporation Has Two Divisions: Division L and Division Q