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Total s„,ez
Total s„,ez .. Company WV,. No. S400.000 South S,C4 000 Ita,alSo exaenaos CoMr.b.rtion ova,o 360.000 2,0,000 280S00 N20.000 80.0013 120.000 Traa-eabte It‘ed ...perms Sevne. co,,,x, .0d ,20.000 80,09_0 _10_2_00 149,95.9
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Expert Solution
1) Computation of Companywide Break-even Point in Dollar Sales:
Companywide Break-even Point in Dollar Sales = Fixed Costs / Contribution Margin Ratio
Here,
Fixed Costs = $120,000 + $50,000 = $170,000
Contribution Margin Ratio = Contribution Margin / Sales = $240,000/$600,000 = 40%
Companywide Break-even Point in Dollar Sales = $170,000/40% = $425,000
2) Computation of Break-even Point in Dollar Sales for North Division:
Break-even Point in Dollar Sales for North Division = Fixed Costs / Contribution Margin Ratio
Here,
Fixed Costs = $60,000
Contribution Margin Ratio = Contribution Margin / Sales = $120,000/$400,000 = 30%
Break-even Point in Dollar Sales for North Division = $60,000/30% = $200,000
3) Computation of Break-even Point in Dollar Sales for South Division:
Break-even Point in Dollar Sales for South Division = Fixed Costs / Contribution Margin Ratio
Here,
Fixed Costs = $60,000
Contribution Margin Ratio = Contribution Margin / Sales = $120,000/$200,000 = 60%
Break-even Point in Dollar Sales for South Division = $60,000/60% = $100,000
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