Answer:
b. $100,000
Explanation:
Devlin Company
Calculation for Total company contribution margin
= $500,000 × 30% = $150,000
Calculation for Total company variable expenses
= $500,000 − $150,000 = $350,000
Division C contribution margin ratio
= (Sales − $300,000) ÷ Sales = 0.25
Sales − $300,000 = 0.25 × Sales
(0.75 × Sales) ÷ 0.75 = $300,000÷ 0.75
Sales = $400,000
Therefore Division D sales = Total company sales − Division C sales
= $500,000 − $400,000 = $100,000
Calculation for each Divisions
Total Company Division C Division D
Sales$500,000$400,000$100,000
Less variable expenses$350,000 $300,000 $50,000
Contribution margin $150,000 $100,000$ 50,000
Contribution margin ratio 0.30 0.25 0.50
