Question

Delisa Corporation has two divisions: Division L and Division Q. Data from the most recent month appear below: Total Company Division L Division Q Sales $ 475,000 $ 179,000 $ 296,000 Variable expenses 279,560 93,080 186,480 Contribution margin 195,440 85,920 109,520 Traceable fixed expenses 117,740 32,340 85,400 Segment margin 77,700 $ 53,580 $ 24,120 Common fixed expenses 45,700 Net operating income $ 32,000 The break-even in sales dollars for Division Q is closest to:

Multiple Choice

$281,180

$230,811

$208,095

$390,880

Answer 1

Correct Answer ----$230,811

Calculations

Working
A	Sales	$          296,000
B	Variable cost	$          186,480
C=A-B	Contribution margin	$          109,520
D=C/A x 100	Contribution margin ratio	37%
E	Total Fixed Segment cost	$             85,400
F=E/D	Breakeven in sales Dollars	$          230,811

Breakeven point in dollars for Segment is Q is calculated using segment fixed cost or Traceable fixed cost for segment Q.

Breakeven sales in dollars= Total fixed cost/Contribution margin ratio.

Contribution margin ratio=Contribution margin/Sales x 100