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Exercise 4-10 (Algo) Companywide and Segment Break-Even Analysis [LO4-5] Crossfire Company segments its business into two regions-East and West. The company prepared a contribution
Exercise 4-10 (Algo) Companywide and Segment Break-Even Analysis [LO4-5] 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 $ 960,000 East $ 640,000 West $ 320,000 768,000 192,000 117,000 537,600 102,400 54,000 230,400 89,600 63,000 75,000 55,000 $ 48,400 $ 26,600 $ 20,000 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? Complete this question by entering your answers in the tabs below. 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. Note: Round intermediate calculations to 2 decimal places Dollar sales for the whole company Dollar sales for the East region Dollar sales for the West region Break-Even point < Req 1 to 3 Req 4 > Show less 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 $ 960,000 768,000 East $ 640,000 537,600 West $ 320,000 230,400 192,000 117,000 102,400 54,000 89,600 63,000 75,000 55,000 $ 48,400 $ 26,600 $ 20,000 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? Complete this question by entering your answers in the tabs below. Req 1 to 3 Req 4 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 Variable expenses Contribution margin Traceable fixed expenses Product line segment margin Common fixed expenses not traceable to products Net operating loss Total Company East < Req 1 to 3 Req 5 > West
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