Question

# Combe Corporation has two divisions: Alpha and Beta. Data from the most recent month appear below:...

Combe Corporation has two divisions: Alpha and Beta. Data from the most recent month appear below:

 Alpha Beta Sales \$ 165,000 \$ 283,500 Variable expenses \$ 107,250 \$ 170,900 Traceable fixed expenses \$ 89,100 \$ 87,700

The company’s common fixed expenses total \$86,500. The break-even in sales dollars for Alpha Division is closest to:

Multiple Choice

• \$501,714

• \$247,143

• \$254,571

• \$78,500

Given Data for Alpha Division :

Sales = \$ 165,000

Less : Variable Expenses = \$ 107,250

Contribution Margin = \$ 57,750

Traceable Fixed Expenses = \$ 89,100

Contribution Margin Ratio = Contribution Margin / Sales * 100 =  \$ 57,750 / \$ 165,000 * 100 = 35%

Break-Even Sales for Alpha Division = Traceable Fixed Expenses / Contribution Margin Ratio

Break-Even Sales for Alpha Division = \$ 89,100 / 35%

Break-Even Sales for Alpha Division = \$ 254,571 (Option - C)

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