Crossfire Company segments its business into two regionsâEastand West. The company prepared a contribution format segmentedincome statement as shown below:
Total Company East West Sales $ 1,170,000 $ 720,000 $ 450,000 Variable expenses 877,500 576,000 301,500 Contribution margin 292,500 144,000 148,500 Traceable fixed expenses 166,000 67,000 99,000 Segment margin 126,500 $ 77,000 $ 49,500 Common fixed expenses 60,000 Net operating income $ 66,500
Required:
1. Compute the companywide break-even point in dollar sales.
2. Compute the break-even point in dollar sales for the Eastregion.
3. Compute the break-even point in dollar sales for the Westregion.
4. Prepare a new segmented income statement based on thebreak-even dollar sales that you computed in requirements 2 and 3.Use the same format as shown above. What is Crossfireâs netoperating income (loss) in your new segmented income statement?
5. Do you think that Crossfire should allocate its common fixedexpenses to the East and West regions when computing the break-evenpoints for each region?
Crossfire Company segments its business into two regionsâEastand West. The company prepared a contribution format segmentedincome statement as shown below:
| Total Company | East | West | ||||||
| Sales | $ | 1,170,000 | $ | 720,000 | $ | 450,000 | ||
| Variable expenses | 877,500 | 576,000 | 301,500 | |||||
| Contribution margin | 292,500 | 144,000 | 148,500 | |||||
| Traceable fixed expenses | 166,000 | 67,000 | 99,000 | |||||
| Segment margin | 126,500 | $ | 77,000 | $ | 49,500 | |||
| Common fixed expenses | 60,000 | |||||||
| Net operating income | $ | 66,500 | ||||||
Required:
1. Compute the companywide break-even point in dollar sales.
2. Compute the break-even point in dollar sales for the Eastregion.
3. Compute the break-even point in dollar sales for the Westregion.
4. Prepare a new segmented income statement based on thebreak-even dollar sales that you computed in requirements 2 and 3.Use the same format as shown above. What is Crossfireâs netoperating income (loss) in your new segmented income statement?
5. Do you think that Crossfire should allocate its common fixedexpenses to the East and West regions when computing the break-evenpoints for each region?
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Related questions
Piedmont Company segments its business into two regionsâNorthand South. The company prepared the contribution format segmentedincome statement shown below: |
| Total Company | North | South | ||||
| Sales | $ | 600,000 | $ | 400,000 | $ | 200,000 |
| Variable expenses | 360,000 | 280,000 | 80,000 | |||
| Contributionmargin | 240,000 | 120,000 | 120,000 | |||
| Traceable fixedexpenses | 120,000 | 60,000 | 60,000 | |||
| Segment margin | 120,000 | $ | 60,000 | $ | 60,000 | |
| Common fixedexpenses | 50,000 | |||||
| Net operatingincome | $ | 70,000 | ||||
| Required: |
| 1. | Compute thecompanywide break-even point in dollar sales . |
| 2. | Compute thebreak-even point in dollar sales for the North region. |
| 3. | Compute thebreak-even point in dollar sales for the South region. |
