Asked by Diana Muñoz on May 03, 2024
Verified
Holts Corporation has two divisions: Xi and Sigma.Data from the most recent month appear below: The company's common fixed expenses total $78,840.The break-even in sales dollars for Sigma Division is closest to:
A) $487,491
B) $606,715
C) $466,018
D) $119,225
Common Fixed Expenses
These are fixed costs that are not directly tied to production levels, such as salaries, rent, and insurance, which are shared across different segments of a business.
Break-Even
The point at which total costs and total revenues are equal, meaning that a business or product is neither making a profit nor sustaining a loss.
Sales Dollars
The total revenue generated from the sale of goods or services by a company before any expenses are deducted.
- Ascertain the break-even levels in sales dollars and unit quantities.
- Discriminate and quantify the effects of directly attributable and communal fixed expenses on the financial performance of business divisions and the corporate entity.
Verified Answer
Dollar sales for the company to break even = (Traceable fixed expenses + Common fixed expenses)÷ CM ratio = ($311,000 + $78,840)÷ 0.64 = $606,715 (your answer may differ due to rounding)
Learning Objectives
- Ascertain the break-even levels in sales dollars and unit quantities.
- Discriminate and quantify the effects of directly attributable and communal fixed expenses on the financial performance of business divisions and the corporate entity.
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