(a) Concept Introduction: Segment analysis is analyzing the business which is divided into segments in regard to determine the more profitable and less profitable business segments and the potential of business to grow in the market. Retail Investor: A retail investor is an individual person who buys and sells the securities for personal, not for an organization. Advisor Services: It is a type of consulting services in which an authorized person develops findings and recommendation that are presented to the client for consideration. To find out: The difference between the Investor (Retail) Services and Advisor Services segments.

Question

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

Answer 1

Question

Chapter 12, Problem 12.4E

To determine

(a)

Concept Introduction:

Segment analysis is analyzing the business which is divided into segments in regard to determine the more profitable and less profitable business segments and the potential of business to grow in the market.

Retail Investor: A retail investor is an individual person who buys and sells the securities for personal, not for an organization.

Advisor Services: It is a type of consulting services in which an authorized person develops findings and recommendation that are presented to the client for consideration.

To find out:

The difference between the Investor (Retail) Services and Advisor Services segments.

To determine

(b)

Concept Introduction:

Segment analysis is analyzing the business which is divided into segments in regard to determine the more profitable and less profitable business segments and the potential of business to grow in the market.

Variable cost: A variable cost is the cost which varies from production size as like, direct material, and production charges etc.

Fixed cost: A fixed cost is the cost which remains same even with change in production volume. The total cost of the product contains variable cost, fixed cost and semi-variable cost.

To provide:

The example for variable and fixed cost in the segment of "Investor (Retail) Services".

To determine

(c)

Concept Introduction:

Contribution Margin: Contribution margin is the net of sale from variable cost i.e. selling price per unit minus variable cost per unit. The contribution is like as revenue which is not consumed by variable cost.

To find out:

The contribution margin for each segment.

To determine

(d)

Concept Introduction:

Contribution Margin: Contribution margin is the net of sale from variable cost i.e. selling price per unit minus variable cost per unit. The contribution is like as revenue which is not consumed by variable cost.

To find out:

The decline in operating income if it decides to sell the advisory services to another company.

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

Segment Profitability Analysis The marketing segment sales for Caterpillar Inc. (CAT) for a recent year follow: Caterpillar Inc.Machinery and Engines Marketing Segment Sales(in millions) BuildingConstructionProducts CatJapan CoreComponents Earthmoving ElectricPower Excavation LargePowerSystems Logistics Marine &PetroleumPower Mining Turbines Sales $2,217 $1,225 $1,234 $5,045 $2,847 $4,562 $2,885 $659 $2,132 $3,975 $3,321 In addition, assume the following information: BuildingConstructionProducts CatJapan CoreComponents Earthmoving ElectricPower Excavation LargePowerSystems Logistics Marine &PetroleumPower Mining Turbines Variable cost of goods sold as a percent of sales 45% 55% 49% 51% 54% 52% 53% 50% 50% 52% 48% Dealer commissions as a percent of sales 9% 11% 8% 8% 10% 6% 5% 10% 9% 7% 9% Variable promotion expenses (in millions) 310 120 150 600 200 600 300 75 270 480 400 a. Use the sales information and the additional assumed information to…

Companywide and Segment Break-Even Analysis Crossfire Company segments its business into two regions—East and West. The company prepared a contribution format segmented income statement as shown below: 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. 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? Why?

Answer 2

Question

Chapter 12, Problem 12.4E

To determine

(a)

Concept Introduction:

Segment analysis is analyzing the business which is divided into segments in regard to determine the more profitable and less profitable business segments and the potential of business to grow in the market.

Retail Investor: A retail investor is an individual person who buys and sells the securities for personal, not for an organization.

Advisor Services: It is a type of consulting services in which an authorized person develops findings and recommendation that are presented to the client for consideration.

To find out:

The difference between the Investor (Retail) Services and Advisor Services segments.

To determine

(b)

Concept Introduction:

Segment analysis is analyzing the business which is divided into segments in regard to determine the more profitable and less profitable business segments and the potential of business to grow in the market.

Variable cost: A variable cost is the cost which varies from production size as like, direct material, and production charges etc.

Fixed cost: A fixed cost is the cost which remains same even with change in production volume. The total cost of the product contains variable cost, fixed cost and semi-variable cost.

To provide:

The example for variable and fixed cost in the segment of "Investor (Retail) Services".

To determine

(c)

Concept Introduction:

Contribution Margin: Contribution margin is the net of sale from variable cost i.e. selling price per unit minus variable cost per unit. The contribution is like as revenue which is not consumed by variable cost.

To find out:

The contribution margin for each segment.

To determine

(d)

Concept Introduction:

Contribution Margin: Contribution margin is the net of sale from variable cost i.e. selling price per unit minus variable cost per unit. The contribution is like as revenue which is not consumed by variable cost.

To find out:

The decline in operating income if it decides to sell the advisory services to another company.

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Answer 3

Question

Chapter 12, Problem 12.4E

To determine

(a)

Concept Introduction:

Segment analysis is analyzing the business which is divided into segments in regard to determine the more profitable and less profitable business segments and the potential of business to grow in the market.

Retail Investor: A retail investor is an individual person who buys and sells the securities for personal, not for an organization.

Advisor Services: It is a type of consulting services in which an authorized person develops findings and recommendation that are presented to the client for consideration.

To find out:

The difference between the Investor (Retail) Services and Advisor Services segments.

To determine

(b)

Concept Introduction:

Segment analysis is analyzing the business which is divided into segments in regard to determine the more profitable and less profitable business segments and the potential of business to grow in the market.

Variable cost: A variable cost is the cost which varies from production size as like, direct material, and production charges etc.

Fixed cost: A fixed cost is the cost which remains same even with change in production volume. The total cost of the product contains variable cost, fixed cost and semi-variable cost.

To provide:

The example for variable and fixed cost in the segment of "Investor (Retail) Services".

To determine

(c)

Concept Introduction:

Contribution Margin: Contribution margin is the net of sale from variable cost i.e. selling price per unit minus variable cost per unit. The contribution is like as revenue which is not consumed by variable cost.

To find out:

The contribution margin for each segment.

To determine

(d)

Concept Introduction:

Contribution Margin: Contribution margin is the net of sale from variable cost i.e. selling price per unit minus variable cost per unit. The contribution is like as revenue which is not consumed by variable cost.

To find out:

The decline in operating income if it decides to sell the advisory services to another company.

Expert Solution & Answer

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Answer 4

Question

Chapter 12, Problem 12.4E

To determine

(a)

Concept Introduction:

Segment analysis is analyzing the business which is divided into segments in regard to determine the more profitable and less profitable business segments and the potential of business to grow in the market.

Retail Investor: A retail investor is an individual person who buys and sells the securities for personal, not for an organization.

Advisor Services: It is a type of consulting services in which an authorized person develops findings and recommendation that are presented to the client for consideration.

To find out:

The difference between the Investor (Retail) Services and Advisor Services segments.

To determine

(b)

Concept Introduction:

Segment analysis is analyzing the business which is divided into segments in regard to determine the more profitable and less profitable business segments and the potential of business to grow in the market.

Variable cost: A variable cost is the cost which varies from production size as like, direct material, and production charges etc.

Fixed cost: A fixed cost is the cost which remains same even with change in production volume. The total cost of the product contains variable cost, fixed cost and semi-variable cost.

To provide:

The example for variable and fixed cost in the segment of "Investor (Retail) Services".

To determine

(c)

Concept Introduction:

Contribution Margin: Contribution margin is the net of sale from variable cost i.e. selling price per unit minus variable cost per unit. The contribution is like as revenue which is not consumed by variable cost.

To find out:

The contribution margin for each segment.

To determine

(d)

Concept Introduction:

Contribution Margin: Contribution margin is the net of sale from variable cost i.e. selling price per unit minus variable cost per unit. The contribution is like as revenue which is not consumed by variable cost.

To find out:

The decline in operating income if it decides to sell the advisory services to another company.

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Answer 5

Chapter 12, Problem 12.4E

To determine

(a)

Concept Introduction:

Segment analysis is analyzing the business which is divided into segments in regard to determine the more profitable and less profitable business segments and the potential of business to grow in the market.

Retail Investor: A retail investor is an individual person who buys and sells the securities for personal, not for an organization.

Advisor Services: It is a type of consulting services in which an authorized person develops findings and recommendation that are presented to the client for consideration.

To find out:

The difference between the Investor (Retail) Services and Advisor Services segments.

To determine

(b)

Concept Introduction:

Segment analysis is analyzing the business which is divided into segments in regard to determine the more profitable and less profitable business segments and the potential of business to grow in the market.

Variable cost: A variable cost is the cost which varies from production size as like, direct material, and production charges etc.

Fixed cost: A fixed cost is the cost which remains same even with change in production volume. The total cost of the product contains variable cost, fixed cost and semi-variable cost.

To provide:

The example for variable and fixed cost in the segment of "Investor (Retail) Services".

To determine

(c)

Concept Introduction:

Contribution Margin: Contribution margin is the net of sale from variable cost i.e. selling price per unit minus variable cost per unit. The contribution is like as revenue which is not consumed by variable cost.

To find out:

The contribution margin for each segment.

To determine

(d)

Concept Introduction:

Contribution Margin: Contribution margin is the net of sale from variable cost i.e. selling price per unit minus variable cost per unit. The contribution is like as revenue which is not consumed by variable cost.

To find out:

The decline in operating income if it decides to sell the advisory services to another company.

Answer 6

Chapter 12, Problem 12.4E

To determine

(a)

Concept Introduction:

Segment analysis is analyzing the business which is divided into segments in regard to determine the more profitable and less profitable business segments and the potential of business to grow in the market.

Retail Investor: A retail investor is an individual person who buys and sells the securities for personal, not for an organization.

Advisor Services: It is a type of consulting services in which an authorized person develops findings and recommendation that are presented to the client for consideration.

To find out:

The difference between the Investor (Retail) Services and Advisor Services segments.

Answer 7

Chapter 12, Problem 12.4E

To determine

(a)

Concept Introduction:

Segment analysis is analyzing the business which is divided into segments in regard to determine the more profitable and less profitable business segments and the potential of business to grow in the market.

Retail Investor: A retail investor is an individual person who buys and sells the securities for personal, not for an organization.

Advisor Services: It is a type of consulting services in which an authorized person develops findings and recommendation that are presented to the client for consideration.

To find out:

The difference between the Investor (Retail) Services and Advisor Services segments.

Answer 8

To determine

(b)

Concept Introduction:

Segment analysis is analyzing the business which is divided into segments in regard to determine the more profitable and less profitable business segments and the potential of business to grow in the market.

Variable cost: A variable cost is the cost which varies from production size as like, direct material, and production charges etc.

Fixed cost: A fixed cost is the cost which remains same even with change in production volume. The total cost of the product contains variable cost, fixed cost and semi-variable cost.

To provide:

The example for variable and fixed cost in the segment of "Investor (Retail) Services".

Answer 9

To determine

(b)

Concept Introduction:

Segment analysis is analyzing the business which is divided into segments in regard to determine the more profitable and less profitable business segments and the potential of business to grow in the market.

Variable cost: A variable cost is the cost which varies from production size as like, direct material, and production charges etc.

Fixed cost: A fixed cost is the cost which remains same even with change in production volume. The total cost of the product contains variable cost, fixed cost and semi-variable cost.

To provide:

The example for variable and fixed cost in the segment of "Investor (Retail) Services".

Answer 10

To determine

(c)

Concept Introduction:

Contribution Margin: Contribution margin is the net of sale from variable cost i.e. selling price per unit minus variable cost per unit. The contribution is like as revenue which is not consumed by variable cost.

To find out:

The contribution margin for each segment.

Answer 11

To determine

(c)

Concept Introduction:

Contribution Margin: Contribution margin is the net of sale from variable cost i.e. selling price per unit minus variable cost per unit. The contribution is like as revenue which is not consumed by variable cost.

To find out:

The contribution margin for each segment.

Answer 12

To determine

(d)

Concept Introduction:

Contribution Margin: Contribution margin is the net of sale from variable cost i.e. selling price per unit minus variable cost per unit. The contribution is like as revenue which is not consumed by variable cost.

To find out:

The decline in operating income if it decides to sell the advisory services to another company.

Answer 13

To determine

(d)

Concept Introduction:

Contribution Margin: Contribution margin is the net of sale from variable cost i.e. selling price per unit minus variable cost per unit. The contribution is like as revenue which is not consumed by variable cost.

To find out:

The decline in operating income if it decides to sell the advisory services to another company.

Answer 14

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Ch. 12 - Mario Company is considering discontinuing a...Ch. 12 - Victor Company is considering disposing of...Ch. 12 - Prob. 3SEQ Ch. 12 - For which cost concept used in applying (he...Ch. 12 - Prob. 5SEQ Ch. 12 - Prob. 1CDQ Ch. 12 - Prob. 2CDQ Ch. 12 - A company could sell a building for $650,000 or...Ch. 12 - Prob. 4CDQ Ch. 12 - Prob. 5CDQ

Solution Summary: The author explains that Segment Analysis is analyzing the business which is divided into segments in regard to determine the more profitable and less profitable business segments.

(c)

Concept Introduction:

Contribution Margin: Contribution margin is the net of sale from variable cost i.e. selling price per unit minus variable cost per unit. The contribution is like as revenue which is not consumed by variable cost.

To find out:

The contribution margin for each segment.

Chapter 12 Solutions

Solution Summary: The author explains that Segment Analysis is analyzing the business which is divided into segments in regard to determine the more profitable and less profitable business segments.

(c) Concept Introduction: Contribution Margin: Contribution margin is the net of sale from variable cost i.e. selling price per unit minus variable cost per unit. The contribution is like as revenue which is not consumed by variable cost. To find out: The contribution margin for each segment.

Chapter 12 Solutions

(c)

Concept Introduction:

Contribution Margin: Contribution margin is the net of sale from variable cost i.e. selling price per unit minus variable cost per unit. The contribution is like as revenue which is not consumed by variable cost.

To find out:

The contribution margin for each segment.