Looking for answers? Westonci.ca is your go-to Q&A platform, offering quick, trustworthy responses from a community of experts. Get accurate and detailed answers to your questions from a dedicated community of experts on our Q&A platform. Experience the ease of finding precise answers to your questions from a knowledgeable community of experts.
Sagot :
Answer:
1. Companywide break-even point in dollar sales = $600,000
2. Break-even point in dollar sales for the North region = $315,000
3. Break-even point in dollar sales for the South region = $105,000
Explanation:
From the question, we are given the following:
Total Company North South
Sales $ 800,000 $ 600,000 $ 200,000
Variable expenses 560,000 480,000 80,000
Contribution margin 240,000 120,000 120,000
Traceable fixed expenses 126,000 63,000 63,000
Segment margin 114,000 $ 57,000 $ 57,000
Common fixed expenses 54,000
Net operating income $ 60,000
Note that:
Break-even point in dollar sales = Fixed cost / Contribution margin ratio ………………… (1)
Therefore, we have:
1. Compute the companywide break-even point in dollar sales.
Fixed cost = Total company’s traceable fixed expenses + Common fixed expenses = $126,000 + $54,000 = $180,000
Contribution margin ratio = Total company’s Contribution margin / Total company’s Sales = $240,000 / $800,000 = 0.30
Using equation (1), we have:
Companywide break-even point in dollar sales = Fixed cost / Contribution margin ratio = $180,000 / 0.30 = $600,000
2. Compute the break-even point in dollar sales for the North region.
Fixed cost = North’s traceable fixed expenses = $63,000
Contribution margin ratio = North’s Contribution margin / North’s Sales = $120,000 / $600,000 = 0.20
Using equation (1), we have:
Break-even point in dollar sales for the North region = Fixed cost / Contribution margin ratio = $63,000 / 0.20 = $315,000
3. Compute the break-even point in dollar sales for the South region.
Fixed cost = South’s traceable fixed expenses = $63,000
Contribution margin ratio = South’s Contribution margin / South’s Sales = $120,000 / $200,000 = 0.60
Using equation (1), we have:
Break-even point in dollar sales for the South region = Fixed cost / Contribution margin ratio = $63,000 / 0.60 = $105,000
Thank you for your visit. We're committed to providing you with the best information available. Return anytime for more. Thank you for your visit. We're dedicated to helping you find the information you need, whenever you need it. Keep exploring Westonci.ca for more insightful answers to your questions. We're here to help.