Answer:
a. For Bulb = $183,418.92
b. For Seed = $96,759.49
c. Break even = $336,144.74
Explanation:
Sales = Bulb Division + Seed Division
= $234,000 + $156,000
= $390,000
Variable Expense = Bulb Division + Seed Division
= $60,840 + $32,760
= $93,600
Contribution margin for bulb = Sales - Variable
= $234,000 - $60,840
= $173,160
Contribution margin for Seed division = Sales - Variable
= $156,000 - $32,760
= $123,240
Total = $390,000 - $93,600
= $296,400
Division Income for bulb = contribution margin - Traceable fixed expenses
= $173,160 - $135,730
= $37,430
Division Income for seed division = contribution margin - Traceable fixed expenses
= $123,240 - $76,440
= $46,800
Total of Division income = $296,400 - $212,170
= $84,230
Common Fixed expenses = $25,980 + $17,320
= $43,300
Income = Total of Division income - Common Fixed expenses
= $84,230 - $43,300
= $40,930
Contribution margin ratio for bulb = Contribution ÷ Sales × 100
= $173,160 ÷ $234,000 × 100
= 74.00%
Contribution margin ratio for seed = Contribution ÷ Sales × 100
= $123,240 ÷ $156,000 × 100
= 79%
Total Contribution margin ratio for bulb and seed = Contribution ÷ Sales × 100
= ($173,160 + $123,240) ÷ $390,000 × 100
= $296,400 ÷ $390,000 × 100
= 76%
a and b. Division’s break-even in sales dollars = Fixed costs ÷ Contribution margin ratio
For Bulb = $183,418.92
For Seed = $96,759.49
c. company’s overall break - even in sales dollars
= (212170 + 43300) ÷ 76%
= $336,144.74
