Question

Buskirk Enterprises has two divisions, a Farm Division and a Garden Division, and reported the following information for its most recent year:

                                                                        Total               Farm               Garden

            Sales                                                    $265,000         $163,000         $102,000

            Variable expenses                               105,390           63,570             41,820

            Contribution margin                            $159,610         $99,430           $60,180

            Traceable fixed expenses                    110,000           68,000             42,000

            Segment margin                                  $49,610           $31,430           $18,180

            Common fixed expenses                     31,800

            Net operating income                          $17,810

1. What is the Garden Division’s break-even in sales dollars?

2. What is the Farm Division’s break-even in sales dollars?

Answer 1

		Farm	Garden
A	Fixed cost that does not matter	Common fixed cost	Common fixed cost
B	Sales revenue	$ 163,000.00	$ 102,000.00
C	Variable expenses	$     63,570.00	$     41,820.00
E= B - C	Contribution margin	$     99,430.00	$     60,180.00
D	Fixed Expenses	$     68,000.00	$     42,000.00
F = E/B	CM ratio	61%	59%
G = C/B	Variable Expense ratio	39%	41%
I = D/F	Break Even in Dollar Sales	$ 111,475.41	$     71,186.44

1. What is the Garden Division’s break-even in sales dollars=$111,475.41

2. What is the Farm Division’s break-even in sales dollars= $71,186.44