rossfire 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 $ 750,000 $ 500,000 $ 250,000

Variable expenses 525,000 375,000 150,000

Contribution margin 225,000 125,000 100,000

Traceable fixed expenses 140,000 60,000 80,000

Segment margin 85,000 $ 65,000 $ 20,000

Common fixed expenses 70,000

Net operating income $ 15,000

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. 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?