Question

# Mckissic Corporation has two divisions: Domestic and Foreign. Data from the most recent month appear below:...

Mckissic Corporation has two divisions: Domestic and Foreign. Data from the most recent month appear below:

 Total Company Domestic Foreign Sales \$ 450,000 \$ 119,000 \$ 331,000 Variable expenses 157,240 38,080 119,160 Contribution margin 292,760 80,920 211,840 Traceable fixed expenses 226,000 57,000 169,000 Segment margin 66,760 \$ 23,920 \$ 42,840 Common fixed expenses 58,500 Net operating income \$ 8,260

The break-even in sales dollars for the company as a whole is closest to:

\$437,304

\$394,323

\$89,418

\$347,886

Solution:

Contribution Margin Ratio (for company) = Contribution Margin 292,760 / Sales 450,000 * 100

= 65.057778% or 0.65057778

Total Fixed Costs for Company = Traceable fixed expenses \$226,000 + Common Fixed Expenses \$58,500

= \$284,500

Break Even in Sales dollars for the company = Total Fixed Costs 284,500 / CM Ratio 0.65057778

= \$437,304

Hence, the correct option is \$437,304

Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you

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