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Crossfire Company segments its business into two regionsEast and West. The company prepared a contribution format segmented income statement as shown below: Total Company East

Crossfire Company segments its business into two regionsEast and West. The company prepared a contribution format segmented income statement as 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.

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 Crossfires 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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