Asked by Diana Muñoz on May 03, 2024

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Holts Corporation has two divisions: Xi and Sigma.Data from the most recent month appear below: 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 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.
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Zybrea KnightMay 07, 2024
Final Answer :
B
Explanation :
  Overall CM ratio = Contribution margin ÷ Sales = $422,150 ÷ $657,000 = 0.64 (rounded; the exact value is used in subsequent computations) 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) Overall CM ratio = Contribution margin ÷ Sales = $422,150 ÷ $657,000 = 0.64 (rounded; the exact value is used in subsequent computations)
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)