Question

Personal Electronix sells computer tablets and MP3 players. The business is divided into two divisions along product lines. CVP income statements for a recent quarter’s activity are presented below. Tablet Division MP3 Player Division Total Sales $755,200 $424,800 $1,180,000 Variable costs 543,744 246,384 790,128 Contribution margin $211,456 $178,416 389,872 Fixed costs 133,812 Net income $256,060

Determine the sales level in dollars for each division at the break-even point. (Round computations to 2 decimal places and final answers to 0 decimal places, e.g. 1,526.)

Answer 1

Particular	Tablet Division	MP3 Player Division	Total
Sales	$755,200	$424,800	$1,180,000
Variable costs	$543,744	$246,384	$790,128
Contribution margin	$211,456	$178,416	$389,872
Fixed costs			$133,812
Net Income			$256,060

Sales mix

Tablet division = $755,200 / $1,180,000

= 64%

MP3 Player Division = $424,800 / $1,180,000

= 36%

Weighted average Contribution margin ratio = Contribution margin / Sales

= $389,872 / $1,180,000

= 33.04%

Break even point in dollars = Fixed costs / Weighted average Contribution margin ratio

= $133,812 / 33.04%

= $405,000

Tablet division sales at break even  = $405,000 * 64%

= $259,200

MP3 Player Division sales at break even = $405,000 * 36%

= $145,800