To calculate the break-even point for each division, we need to determine the contribution margin ratio for each division.
The contribution margin ratio is calculated by subtracting variable expenses from sales and dividing by sales. For the home division, the contribution margin ratio is ($328,000 - $100,360) / $328,000 = 69%. For the commercial division, the contribution margin ratio is ($394,000 - $153,430) / $394,000 = 61.1%. The break-even point for the home division can be calculated by dividing the traceable fixed expenses by the contribution margin ratio: $103,000 / 0.69 = $149,275 (rounded to the nearest dollar).
The break-even point for the commercial division can be calculated by dividing the traceable fixed expenses by the contribution margin ratio: $136,000 / 0.611 = $222,824 (rounded to the nearest dollar). The company's overall break-even point can be calculated by dividing the company's total traceable fixed expenses by the weighted average contribution margin ratio. To calculate the weighted average contribution margin ratio, we multiply the contribution margin ratio for each division by its proportion of total sales.
The weighted average contribution margin ratio is (0.69 * $328,000 + 0.611 * $394,000) / $722,000 = 0.644. The overall break-even point for the company can be calculated by dividing the total company's traceable fixed expenses by the weighted average contribution margin ratio: $239,000 / 0.644 = $371,435 (rounded to the nearest dollar).