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Crossfire Company segments its business into two regionsEast and West. The company prepared a contribution...

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Accounting

Crossfire Company segments its business into two regionsEast and West. The company prepared a contribution format segmented income statement as shown below:

Total Company East West
Sales $ 960,000 $ 640,000 $ 320,000
Variable expenses 672,000 480,000 192,000
Contribution margin 288,000 160,000 128,000
Traceable fixed expenses 158,000 69,000 89,000
Segment margin 130,000 $ 91,000 $ 39,000
Common fixed expenses 70,000
Net operating income $ 60,000

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 Crossfires 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?

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