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