Question

Last year Easton Corporation reported sales of $790,000, a contribution margin ratio of 20% and a net loss of $31,000. Based on this information, the break-even point was Multiple Choice Ο Ο S635,000 Ο $1,100,000 Ο . $821000 Ο 6946,000

Answer 1

1. For this answer is Option - 4 i.e $945,000.

Explanation:

Profit= (Contribution margin ratio × Sales) - Fixed expenses

-$31,000 = (20%×$790,000)- Fixed expenses

Fixed expenses = $158,000+$31,000

Fixed expenses=$189,000

Dollar sales to Break-even point= Fixed expenses÷ Contribution margin ratio

=$189,000/0.20

=$945,000.

2. For this answer is Option 4 i.e $30,540

	East	West	Total company
Sales	$330,000	$144,000	$474,000
Variable expenses	($132,000)	($76,320)	($208,320)
Contribution margin	$198,000	$67,680	$265,680
Traceable fixed expenses	($140,000)	($43,000)	($183,000)
Segment margin	$58,000	$24,680	$82,680
Common fixed expenses			($52,140)
Net operating income			$30,540

3. For this answer is Option 3 i.e $183,544

Segment contribution margin ratio= Segment contribution margin÷ Segment sales

= $239,370/$303,000

=0.79

Break-even in sales Dollar for N is Closet to =

Segment Traceable Fixed expenses÷ Segment CM ratio

= $145,000/0.79

=$183,544.

4.

selling price per unit = $305,000/5,000 = $61

Variable cost per unit =$150,000/5,000 =$30

Sales (5,200units @$61)	$317,200
Variable expenses (5,200 units @$30)	($156,000)
Contribution margin	$161,200
Fixed expenses	($104,400)
Net operating income	$56,800

______×_____

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