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

Homework Answers

Answer #1

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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