Question

Criblez Corporation has two divisions: Blue Division and Gold Division. The following report is for the most recent operating period:

Total company Blue Division Gold Division
Sales $431,000 $106,000 $325,000
Variable expenses 154,810 54,060 100,750
Contribution margin 276,190 51,940 224,250
Traceable fixed expenses 177,000 38,000 139,000
Segment margin 99,190 $13,940 $85,250
Net operating income $30,230

The Blue Division's break-even sales are closest to: _____

Answer 1

The Blue Division's break-even sales are closest to $276,212

Step-by-step explanation:

Break even point is the level at which a firm makes neither profit nor loss.

Break-even sales (dollars) = Fixed Costs ÷ Contribution Margin

Where,

Contribution Margin = Contribution ÷ Sales

= $276,190 ÷ $431,000

= 0.64

Therefore,

Break-even sales (dollars) = $177,000 ÷ 0.64

= $276,212