Question
Crossfire Company segments its business into two regionsEast and West. The company prepared the contribution format segmented income statement shown below: Total Company East West
Crossfire Company segments its business into two regionsEast and West. The company prepared the contribution format segmented income statement shown below: Total Company East West Sales $ 1,040,000 $ 650,000 $ 390,000 Variable expenses 676,000 442,000 234,000 Contribution margin 364,000 208,000 156,000 Traceable fixed expenses 148,000 64,000 84,000 Segment margin 216,000 $ 144,000 $ 72,000 Common fixed expenses 76,000 Net operating income $ 140,000 Required: 1. Compute the companywide break-even point in dollar sales. (Round intermediate calculations to two decimal places) 2. Compute the break-even point in dollar sales for the East region. (Round intermediate calculations to two decimal places) 3. Compute the break-even point in dollar sales for the West region. (Round intermediate calculations to two decimal places) 4. Prepare a new segmented income statement based on the break-even dollar sales that you computed in requirements 2 and 3. 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? Yes No
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