Muhn Corporation has two divisions: Division K and Division L.Data from the most recent month appear below: Management has allocated common fixed expenses to the Divisions based on their sales.The break-even in sales dollars for Division K is closest to:
A)$212, 340
B)$246, 596
C)$370, 000
D)$159, 574

Question

Muhn Corporation has two divisions: Division K and Division L.Data from the most recent month appear below:  Management has allocated common fixed expenses to the Divisions based on their sales.The break-even in sales dollars for Division K is closest to:
A)$212, 340 
B)$246, 596 
C)$370, 000 
D)$159, 574

Quizplus · Accepted Answer

Division K:
Segment CM ratio = Segment contribution margin ÷ Segment sales
= $116, 560 ÷ $248, 000 = 0.47
Dollar sales for a segment to break even = Segment traceable fixed expenses ÷ Segment CM ratio
= $75, 000 ÷ 0.47 = $159, 574

Muhn Corporation Has Two Divisions: Division K and Division L