Question

Combe Corporation has two divisions: Alpha and Beta. Data from the most recent month appear below: Alpha Beta Sales $ 213,000 $ 270,900 Variable expenses $ 125,670 $ 140,600 Traceable fixed expenses $ 107,910 $ 89,900 The company’s common fixed expenses total $84,800. The break-even in sales dollars for Alpha Division is closest to:

• $470,024

• $263,195

• $128,200

• $206,829

Answer 1

Answer = $263,195 Sales Varaible expenses Contribution Margin Traceable fixed expenses Product line segment Margin Common Fixed Expenses Net Operating Income Product line Total Company Alpha Beta $ 483,900 $ 213,000 $ 270,900 $ 266,270 $ 125,670 $ 140,600 | $ 217,630 $ 87,330 $ 130,300 I $ 197,810 $ 107,910 $ 89,900 19,820 $ (20,580) $ 40,400 $ 84,800 $ (64,980) Alpha Division Contribution Margin ratio = Contribution margin / Sales = $87,330/$213,000 = 41% Break even sales = Fixed Cost / Contribution margin ratio = $107,910/41% = $263,195