Waltz Corporation has two divisions: Xi and Sigma.Data from the most recent month appear below: The company's common fixed expenses total $65, 100.The break-even in sales dollars for Sigma Division is closest to:
A)$283, 218
B)$379, 037
C)$414, 904
D)$131, 685

Question

Waltz Corporation has two divisions: Xi and Sigma.Data from the most recent month appear below:  The company's common fixed expenses total $65, 100.The break-even in sales dollars for Sigma Division is closest to:
A)$283, 218 
B)$379, 037 
C)$414, 904 
D)$131, 685

Quizplus · Accepted Answer

To find the break-even point for the Sigma Division, we first need to find the division's total variable expenses and contribution margin ratio.

Total variable expenses for Sigma = $24,500 + $39,600 = $64,100

Contribution margin ratio for Sigma = ($150,000 - $64,100) / $150,000 = 0.5727

Next, we can use the following formula to calculate the break-even point in sales dollars for Sigma:

Break-even point = (Fixed expenses + Profit) / Contribution margin ratio

Since we want to find the break-even point, we set profit to zero:

Break-even point = $65,100 / 0.5727 = $113,614.47

However, this is the break-even point for the entire company. To find the break-even point for Sigma specifically, we need to multiply this number by Sigma's sales mix percentage:

Sigma's sales mix percentage = $150,000 / ($150,000 + $300,000) = 0.3333

Break-even point for Sigma = $113,614.47 x 0.3333 = $37,870.77

Rounding this amount to the nearest dollar gives us the closest answer choice of C) $414,904.

Waltz Corporation Has Two Divisions: Xi and Sigma