Therrell Corporation has two divisions: Bulb Division and Seed Division. The fol

Question

Therrell Corporation has two divisions: Bulb Division and Seed Division. The following report is for the most recent operating period:

The common fixed expenses have been allocated to the divisions on the basis of sales.

Required:(For all requirements, do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)

a. What is the Bulb Division’s break-even in sales dollars?

b. What is the Seed Division’s break-even in sales dollars?

c. What is the company’s overall break-even in sales dollars?

Bulb Division Seed Division Sales $ 315,000 $ 210,000 Variable expenses $ 81,900 $ 44,100 Traceable fixed expenses $ 115,240 $ 86,100 Common fixed expense $ 28,680 $ 19,120

Explanation / Answer

Bulb Division Seed Division Total Company Sales $                                315,000 $                           210,000 $                                                                                        525,000 Less: Variable expenses $                                  81,900 $                             44,100 $                                                                                        126,000 Contribution margin $                                233,100 $                           165,900 $                                                                                        399,000 Contribution margin ratio (Contribution margin / Sales) 74% 79% 76% Break even point in sales = Total Fixed Expenses / Contribution margin ratio $115,240/74% = $155,730 $86,100*79% = $68,019 ($115,240+86,100+$28,680+$19,120)/76% = $327,816

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