Question

elisa Corporation has two divisions: Division L and Division Q. Data from the most recent month appear below: Total Company Division L Division Q Sales $528,000 $142,000 $386,000 Variable expenses 319,460 72,420 247,040 Contribution margin 208,540 69,580 138,960 Traceable fixed expenses 109,920 29,400 80,520 Segment margin 98,620 $ 40,180 $ 58,440 Common fixed expenses 55,370 Net operating income $ 43,250 The break-even in sales dollars for Division Q is closest to:

Answer 1

the break even point in sales dollars is $223,667

Step-by-step explanation:

The computation of the break even point in sales dollars is shown below:

= Fixed cost ÷ contribution margin ratio

= $80,520 ÷ ($138,960 ÷ $386,000)

= $80,520 ÷ 36%

= $223,667

Hence, the break even point in sales dollars is $223,667