Question

A company has two departments as follows. A dept F dept Total Sales 337,500 150,000 487,500...

A company has two departments as follows.
A dept F dept Total
Sales 337,500 150,000 487,500
Variable expenses 74,250 45,000 119,250
Contribution margin 263,250 105,000 368,250
fixed expenses 206,250 72,500 278,750
Department Margin 32,500 89,500
Common fixed expense 58,500
Net operating income 31,000
Compute
a. Break-even in sales dollars for A and F department
b. The company break-even in sales dollars?
d. The company total net operating income if the company performed at break-even point of two
department.

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Homework Answers

Answer #1

Solution a:

Segment's Break even point in dollar sales
Department A Department F
Segments Contribution margin 263250 105000
/Segment's Sales 337500 150000
Contribution Margin ratio 78.00% 70.00%
Direct Fixed Costs 206250 72500
/Contribution Margin ratio 78.00% 70.00%
Segment's Break even point in dollar sales 264423 103571

Solution b:

Companywide Break even point in dollar sales
Total
Total Contribution margin 368250
/Total Sales 487500
Contribution Margin ratio 75.539%
Total Companywide Fixed Costs 337250
/Contribution Margin ratio 75.539%
Companywide Break even point in dollar sales 446461

Solution d:

if the company performed at break-even point of two department, then company will not be able to recover its common fixed costs, therefore net operating income will be = ($58,500)

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