Wyrich Corporation has two divisions: Blue Division and Gold Division. The follo

Question

Wyrich Corporation has two divisions: Blue Division and Gold Division. The following report is for the most recent operating period:

The company’s overall break-even sales is closest to:

Multiple Choice

$518,750

$412,564

$106,186

$506,409

Total Company Blue Division Gold Division Sales $ 522,000 $ 391,000 $ 131,000 Variable expenses 160,670 89,930 70,740 Contribution margin 361,330 301,070 60,260 Traceable fixed expenses 286,000 239,000 47,000 Segment margin 75,330 $ 62,070 $ 13,260 Common fixed expenses 73,080 Net operating income $ 2,250

Explanation / Answer

Overall CM ratio = 361330/522000= 69.2203% Overall break-even sales=Fixed expenses/CM ratio=(286000+73080)/69.2203%= $518750 Option 1 is correct

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