Question

Neelon Corporation has two divisions: Southern Division and Northern Division. The following data are for the most recent operating period:

Total Company Southern Division Northern Division
Sales $ 302,000 $ 160,200 $ 141,800
Variable expenses $ 117,780 $ 62,478 $ 55,302
Traceable fixed expenses $ 177,300 $ 60,800 $ 116,500
Common fixed expense $ 60,400 $ 32,040 $ 28,360

The common fixed expenses have been allocated to the divisions on the basis of sales.

The Northern Division’s break-even sales is closest to:

Multiple Choice

a.$190,984

b.$129,762

c.$152,197

d.$198,689

Answer 1

Answer:

Breakeven sales for Northern division is  $190,983.61  

Explanation:

Northern division breakeven sales=traceable fixed expenses/contribution margin ratio

traceable fixed expenses for Northern division is $116,500

contribution margin ratio=contribution margin /sales

contribution margin=sales -variable expenses=$141,800-$55,302=$86,498.00

sales is $141,800

contribution margin ratio= $86,498.00/$141,800=0.61

breakeven sales= $116,500/0.61=$ 190,983.61