Gulinson Corporation has two divisions: Division A and Division B.Data from the most recent month appear below: The break-even in sales dollars for Division A is closest to:

A) $134,694
B) $184,531
C) $487,179
D) $267,367

Question

Gulinson Corporation has two divisions: Division A and Division B.Data from the most recent month appear below:

The break-even in sales dollars for Division A is closest to:

A) $134,694
B) $184,531
C) $487,179
D) $267,367

tiffany cooper · Accepted Answer

Final Answer : A, Explanation :  To calculate the break-even point for Division A, we need to use the contribution margin ratio (CMR) formula:CMR = (Sales - Variable Costs) / SalesWe have the following information for Division A:- Sales = $875,000- Variable Costs = $262,500 + 0.15(Sales) = $393,750Plugging these numbers into the CMR formula:CMR = ($875,000 - $393,750) / $875,000 = 0.55To find the break-even point, we need to divide the total fixed costs by the CMR:Break-even point = Total Fixed Costs / CMRWe are given that the total fixed costs for Division A are $74,583.Break-even point = $74,583 / 0.55 = $135,605, which is closest to option A: $134,694. Division A:Segment CM ratio = Segment contribution margin ÷ Segment sales= $108,780 ÷ $222,000 = 0.49Dollar sales for a segment to break even = Segment traceable fixed expenses ÷ Segment CM ratio= $66,000 ÷ 0.49 = $134,694

Gulinson Corporation has two divisions: Division A and Division B.Data from the most recent month appear below: The break-even in sales dollars for Division A is closest to:

A) $134,694
B) $184,531
C) $487,179
D) $267,367

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Gulinson Corporation has two divisions: Division A and Division B.Data from the most recent month appear below: The break-even in sales dollars for Division A is closest to:A) $134,694B) $184,531C) $487,179D) $267,367

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Learning Objectives

Learning Objectives

Related questions

Gulinson Corporation has two divisions: Division A and Division B.Data from the most recent month appear below: The break-even in sales dollars for Division A is closest to:

A) $134,694
B) $184,531
C) $487,179
D) $267,367