Question
6. Crossfire Company segments its business into two regions-East and West. The company prepared a contribution format segmented income statement as shown below: Sales Variable
6. Crossfire Company segments its business into two regions-East and West. The company prepared a contribution format segmented income statement as shown below: Sales Variable expenses Contribution margin Total Company $ 1,170,000 877,500 East $ 720,000 West $ 450.000 292,500 Traceable fixed expenses 166,000 576,000 144,000 67,000 301,500 148,500 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 East region. 3. Compute the break-even point in dollar sales for the West region. 4. Prepare a new segmented income statement based on the break-even dollar sales that you computed in requirements 2 and 3. What is Crossfire's net operating income (loss) in your new segmented income statement? 5. Do you think that Crossfire should allocate its common fixed expenses to the East and West regions when computing the break-even points for each region
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