Phong 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 $102, 340. The Consumer Division's break-even sales is closest to:
A)$273, 000
B)$405, 442
C)$167, 442
D)$584, 762

Question

Phong 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 $102, 340. The Consumer Division's break-even sales is closest to:
A)$273, 000 
B)$405, 442 
C)$167, 442 
D)$584, 762

Quizplus · Accepted Answer

Segment contribution margin = Segment sales - Segment variable expenses
= $267, 000 - $152, 190 = $114, 810
Segment CM ratio = Segment contribution margin ÷ Segment sales
= $114, 810 ÷ $267, 000 = 0.430
Dollar sales for a segment to break even = Traceable fixed expenses ÷ Segment CM ratio
= $72, 000 ÷ 0.430 = $167, 442

Phong Corporation Has Two Divisions: Consumer Division and Business Division