Question

Crossfire Company segments its business into two regions—East and West. The company prepared the contribution format segmented income statement shown below:

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

Required:

1. Compute the companywide break-even point in dollar sales. (Round intermediate calculations to two decimal places.)      

2. Compute the break-even point in dollar sales for the East region. (Round intermediate calculations to two decimal places.)

3. Compute the break-even point in dollar sales for the West region. (Round intermediate calculations to two decimal places.)

4. Prepare a new segmented income statement based on the break-even dollar sales that you computed in requirements 2 and 3.

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

Answer 1

The answer has been presented in the supporting sheet. For detauiled answer refer to the supporting sheet.