Chang Corporation Has Two Divisions, T and W

question 322

Multiple Choice

Chang Corporation has two divisions, T and W. The company's overall contribution margin ratio is 40%, with sales in the two divisions totaling $900,000. If variable expenses are $200,000 in Division T and if Division W's contribution margin ratio is 20%, the sales in Division W must be:

• A) $200,000
• B) $425,000
• C) $700,000
• D) $340,000

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Definitions:

Retained Earnings

The portion of a company's profit that is held back and not distributed to shareholders, used for reinvestment or debt payment.

Dividend

A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.

Expense Matching

An accounting principle that states expenses should be recorded in the same period as the revenues they helped to generate, to accurately match income with expenses.

Cause and Effect

A relationship where one event (the cause) leads to the outcome of another event (the effect).