Delisa Corporation has two divisions: Division L and Division Q. Data from the most recent month appear below:
| Total Company | Division L | Division Q | |||||||
| Sales | $ | 587,000 | $ | 172,000 | $ | 415,000 | |||
| Variable expenses | 376,090 | 98,040 | 278,050 | ||||||
| Contribution margin | 210,910 | 73,960 | 136,950 | ||||||
| Traceable fixed expenses | 105,290 | 30,870 | 74,420 | ||||||
| Segment margin | 105,620 | $ | 43,090 | $ | 62,530 | ||||
| Common fixed expenses | 68,550 | ||||||||
| Net operating income | $ | 37,070 | |||||||
The break-even in sales dollars for Division Q is closest to:
Answer
Segment CM ratio = Segment contribution margin ÷ Segment sales
= $136,950 ÷ $415,000 = 0.33
Dollar sales for a segment to break even = Segment traceable fixed expenses ÷ Segment CM ratio
= $74,420 ÷ 0.33 = $225,515Please like it
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