Question

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

Answer 1

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

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