17. What is the breakeven revenue for XYZ Corporation? A. $200,000 B. $250,000 C

Question

17. What is the breakeven revenue for XYZ Corporation? A. $200,000 B. $250,000 C. $300,000 D. $500,000 18. What is the margin of safety in percentage for XYZ Corporation? A.20% B.40% C, 50% D. 100% 19. if XYZ Corporation is expected to sell 10% more units in August, how much the profit (net operating income) of XYZ Corporation would change? A. 10% B.20% C. 40% D, 50% 20. Which of the following statement is false? A. A firm with higher margin of safety has lower operating risk. B. A firm with higher fraction of fixed costs has higher operating risk. C. A firm with higher fraction of variable costs has lower operating risk. (Questions 21-22) Carrejo Corporation has two divisions: Division M and Division N. Data from the most recent month appear below Total Company Division M Division N $404,000 $181,000 $223,000 251,870 115,840 136,030 Sales Variable expenses152.130 Contribution margin Traceable fixed expenses192.000 Segment margin Common fixed expenses..52.520 ?100-86.970 87.000 28,840 59,870 31,030 23,530 $7.350 $5.310 $2.040 21. Management has allocated common fixed expenses to the Divisions based on their sales. The break 28.990 Net operating income even in sales dollars for Division N is closest to: A)$172,131 B) $219,656 C) $258,230 D) $392,211

Explanation / Answer

Answer to Question No. 21

Option A i.e. $172,131.

Segment Contribution Margin ratio = Segment Contribution Margin / Segment Sales * 100
Segment Contribution Margin ratio = 136,030 / 223,000 * 100
Segment Contribution Margin ratio = 61%

Break Even Sales of Segment N = Segment Traceable Fixed Expenses / Segment Contribution Margin ratio
Break Even Sales of Segment N = 105,000 / 0.61
Break Even Sales of Segment N = $172,131

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