Bertie 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 $103,360.
-The Wholesale Division's break-even sales is closest to:
A) $145,763
B) $320,949
C) $212,898
D) $584,815

Question

Bertie 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 $103,360.
-The Wholesale Division's break-even sales is closest to:
A) $145,763 
B) $320,949 
C) $212,898 
D) $584,815

Quizplus · Accepted Answer

Segment contribution margin = Segment sales - Segment variable expenses
= $233,000 - $95,530 = $137,470
Segment CM ratio = Segment contribution margin ÷ Segment sales
= $137,470 ÷ $233,000 = 0.590
Dollar sales for a segment to break even = Traceable fixed expenses ÷ Segment CM ratio
= $86,000 ÷ 0.590 = $145,763

Bertie Corporation Has Two Divisions: Retail Division and Wholesale Division