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Gulinson corporation has two divisions: division a and division



b. data from the most recent month appear below: total company division a division b sales $ 591,000 $ 222,000 $ 369,000 variable expenses 275,580 113,220 162,360 contribution margin 315,420 108,780 206,640 traceable fixed expenses 195,000 66,000 129,000 segment margin 120,420 $ 42,780 $ 77,640 common fixed expenses 65,010 net operating income $ 55,410 the break-even in sales dollars for division a is closest to:

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Answer:

Break even point for division A = $134,694

Explanation:

                                Total Company            Division A        Division B

Sales                                $591,000              $222,000      $369,000

Variable expenses         $275,580                $113,220       $162,360

Contribution margin        $315,420               $108,780       $206,640

Traceable fixed exp.       $195,000                $66,000       $129,000

Segment margin             $120,420                 $42,780         $77,640

Common fixed exp.          $65,010

Net operating income      $55,410

contribution margin ratio:

  • company = $315,420 / $591,000 = 0.5337 or 53.37%
  • Div. A = $108,780 / $222,000 = 0.49 or 49%
  • Div. B = $206,640 / $369,000 = 0.56 or 56%

break even point:

  • company = ($195,000 + $65,010) / 0.5337 = $487,184
  • Div. A = $66,000 / 0.49 = $134,694
  • Div. B = $129,000 / 0.56 = $230,357

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