Question

In: Accounting

Crossfire Company segments its business into two regions—East and West. The company prepared the contribution format...

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

Solutions

Expert Solution

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


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