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Crossfire Company segments its business into two regions-East and West. The company prepared a contribution format segmented income statement as shown below: Total Company Sales
Crossfire Company segments its business into two regions-East and West. The company prepared a contribution format segmented income statement as shown below: Total Company Sales Variable expenses Contribution margin Traceable fixed expenses Segment margin Common fixed expenses Net operating income $ 1,005,000 804,000 East $670,000 West $335,000 542,700 261,300 201,000 127,300 73,700 112,000 57,000 55,000 89,000 $ 70,300 $ 18,700 56,000 $ 33,000 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? Req 1 to 3 Req 4 Req 5 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. (Round intermediate calculations to 2 decimal places) Dollar sales for the whole company Dollar sales for the East region Break-Even point Dollar sales for the West region Req 1 to 3 Req 41 Req 5 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? Sales Vanable expenses Contribution margin Traceable fixed expenses Product line segment margin Common fixed expenses not traceable to products Net operating loss Total Company East West Req 1 to 3 Req 4 Req 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 ONO < Req 4 Req 5
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