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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 S
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 S 975, 000 650,000 325,000 East West Sales Variable expenses Contribution margin Traceable fixed expenses Segment margin Common fixed expenses Net operating income 682, 500 292, 500 156,000 136, 500 94,500 42,000 487,500 162, 500 195,000 130,000 68,0008800 60,000 $ 76, 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. Use the same format as shown above. 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? Break-Even Dollar sales for the whole Dollar sales for the East region S Dollar sales for the West region S s 720,000 480,000 240,000 Rent East West 720,000s 480,000 Sales Variable expenses Contribution margin Traceable fixed expenses Product line segment margin Common fixed expenses not traceable to 240,000 504,000 360,0 144,000 216,000 20,00096,000 156,00 68,000 88,00 60,000 52,000 8,000 60,000 uc Net operating loss
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