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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Crossfire Company segments its business into two regionsAc€??East and West. The company prepared the contribution format segmented income statement shown below:
| Â | Total Company |
East | West | |||
| Â Â Sales | $ | 910,000 | $ | 650,000Â Â | $ | 260,000Â Â |
| Â Â Variable expenses | Â | 637,000Â Â | Â | 468,000Â Â | Â | 169,000Â Â |
| Â | Â | Â | Â | Â | Â | Â |
| Â Â Contribution margin | Â | 273,000Â Â | Â | 182,000Â Â | Â | 91,000Â Â |
| Â Â Traceable fixed expenses | Â | 133,000Â Â | Â | 70,000Â Â | Â | 63,000Â Â |
| Â | Â | Â | Â | Â | Â | Â |
| Â Â Segment margin | Â | 140,000Â Â | $ | 112,000Â Â | $ | 28,000Â Â |
| Â | Â | Â | Â | Â | Â | Â |
| Â Â Common fixed expenses | Â | 56,000Â Â | Â | Â | Â | Â |
| Â | Â | Â | Â | Â | Â | Â |
| Â Â Net operating income | $ | 84,000Â Â | Â | Â | Â | Â |
| Â | Â | Â | Â | Â | Â | Â |
| Â | ||||||
| Required: |
| 1. |
Compute the companywide break-even point in dollar sales. (Round intermediate calculations to two decimal places) |
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| 2. |
Compute the break-even point in dollar sales for the East region.(Round intermediate calculations to two decimal places) |
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| 3. |
Compute the break-even point in dollar sales for the West region.(Round intermediate calculations to two decimal places) |
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| 4. | Prepare a new segmented income statement based on the break-even dollar sales that you computed in requirements 2 and 3. |
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| 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? |
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