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?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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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?

Crossfire Company segments its business into two regions-East and West. The company prepared a contribution format segmented
income statement as shown below:
Total
Company
$ 910,000
637,000
East
West
$ 650,000
468,000
182,000
$ 260,000
169,000
91,000
Sales
Variable expenses
Contribution margin
Traceable fixed expenses
273,000
133,000
70,000
63,000
Segment margin
140,000
$ 112,000
$
28,000
Common fixed expenses
56,000
Net operating income
$
84,000
Transcribed Image Text:Crossfire Company segments its business into two regions-East and West. The company prepared a contribution format segmented income statement as shown below: Total Company $ 910,000 637,000 East West $ 650,000 468,000 182,000 $ 260,000 169,000 91,000 Sales Variable expenses Contribution margin Traceable fixed expenses 273,000 133,000 70,000 63,000 Segment margin 140,000 $ 112,000 $ 28,000 Common fixed expenses 56,000 Net operating income $ 84,000
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