Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Exercise 6-10 Companywide and Segment Break-Even Analysis (LO6-5) Crossfire Company segments its business into two regionsEast and West. The company prepared a contribution format segmented
Exercise 6-10 Companywide and Segment Break-Even Analysis (LO6-5) Crossfire Company segments its business into two regionsEast 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 Net operating income Total Company 960,000 768,000 192,000 117,000 75,000 55,000 20,000 East $ 640,000 537,600 102,400 54,000 $ 48,400 West $ 320,000 230,400 89,600 63,000 $ 26,600 $ 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? Req 1 to 3 Req 4 Reg 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) Break-Even point Dollar sales for the whole company Dollar sales for the East region Dollar sales for the West region Req 1 to 3 Req 4 Reg 5 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? Total Company East West Req 1 to 3 Req 4 Reg 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 No
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started