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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: Sales Variable expenses
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 Traceable fixed expenses Segment margin Common fixed expenses Total Company $ 1,005,000 East $ 670,000 West $ 335,000 542,700 261,300 804,000 201,000 112,000 127,300 57,000 73,700 55,000 89,000 $ 70,300 $ 18,700 56,000 $ 33,000 Net operating income 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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