Answer:
Break even point for division A = $134,694
Explanation:
Total Company Division A Division B
Sales $591,000 $222,000 $369,000
Variable expenses $275,580 $113,220 $162,360
Contribution margin $315,420 $108,780 $206,640
Traceable fixed exp. $195,000 $66,000 $129,000
Segment margin $120,420 $42,780 $77,640
Common fixed exp. $65,010
Net operating income $55,410
contribution margin ratio:
- company = $315,420 / $591,000 = 0.5337 or 53.37%
- Div. A = $108,780 / $222,000 = 0.49 or 49%
- Div. B = $206,640 / $369,000 = 0.56 or 56%
break even point:
- company = ($195,000 + $65,010) / 0.5337 = $487,184
- Div. A = $66,000 / 0.49 = $134,694
- Div. B = $129,000 / 0.56 = $230,357
