Hogans Corporation has two divisions: Delta and Echo.Data from the most recent month appear below: The company's common fixed expenses total $64,090.The break-even in sales dollars for Echo Division is closest to:
A)$250,143
B)$387,059
C)$173,469
D)$304,265

Question

Hogans Corporation has two divisions: Delta and Echo.Data from the most recent month appear below:  The company's common fixed expenses total $64,090.The break-even in sales dollars for Echo Division is closest to:
A)$250,143 
B)$387,059 
C)$173,469 
D)$304,265

Quizplus · Accepted Answer

Echo Division:
Segment contribution margin = Segment sales - Segment variable expenses
= $221,000 - $112,710 = $108,290
Segment CM ratio = Segment contribution margin ÷ Segment sales
= $108,290 ÷ $221,000 = 0.49
Dollar sales for a segment to break even = Segment traceable fixed expenses ÷ Segment CM ratio
= $85,000 ÷ 0.49 = $173,469

Hogans Corporation Has Two Divisions: Delta and Echo