Warburton Corporation has two divisions: Alpha and Beta.Data from the most recent month appear below: The company's common fixed expenses total $85,690.The break-even in sales dollars for Alpha Division is closest to:
A)$273,623
B)$162,338
C)$420,116
D)$217,117

Question

Warburton Corporation has two divisions: Alpha and Beta.Data from the most recent month appear below:  The company's common fixed expenses total $85,690.The break-even in sales dollars for Alpha Division is closest to:
A)$273,623 
B)$162,338 
C)$420,116 
D)$217,117

Quizplus · Accepted Answer

Alpha Division:
Segment contribution margin = Segment sales - Segment variable expenses
= $222,000 - $51,060 = $170,940
Segment CM ratio = Segment contribution margin ÷ Segment sales
= $170,940 ÷ $222,000 = 0.77
Dollar sales for a segment to break even = Segment traceable fixed expenses ÷ Segment CM ratio
= $66,410 ÷ 0.77 = $162,338

Warburton Corporation Has Two Divisions: Alpha and Beta