Carriveau 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 $63,360.
-The Consumer Division's break-even sales is closest to:
A) $215,942
B) $268,710
C) $488,153
D) $307,768

Question

Carriveau 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 $63,360.
-The Consumer Division's break-even sales is closest to:
A) $215,942 
B) $268,710 
C) $488,153 
D) $307,768

Quizplus · Accepted Answer

Segment contribution margin = Segment sales - Segment variable expenses
= $331,000 - $102,610 = $228,390
Segment CM ratio = Segment contribution margin ÷ Segment sales
= $228,390 ÷ $331,000 = 0.690
Dollar sales for a segment to break even = Traceable fixed expenses ÷ Segment CM ratio
= $149,000 ÷ 0.690 = $215,942

Carriveau Corporation Has Two Divisions: Consumer Division and Business Division