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

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Accounting

Crossfire Companysegments its business into two regions—East and West. The companyprepared a contribution format segmented income statement as shownbelow:
Total Company East West
Sales $ 930,000 $ 620,000 $ 310,000
Variable expenses 744,000 514,600 229,400
Contribution margin 186,000 105,400 80,600
Traceable fixed expenses 116,000 51,000 65,000
Segmentmargin 70,000 $ 54,400 $ 15,600
Common fixed expenses 62,000
Net operating income $ 8,000
Required:
1. Compute thecompanywide break-even point in dollar sales.
2. Compute thebreak-even point in dollar sales for the East region.
3. Compute thebreak-even point in dollar sales for the West region.
4. Prepare a newsegmented income statement based on the break-even dollar salesthat you computed in requirements 2 and 3. Use the same format asshown above. What is Crossfire’s net operating income (loss) inyour new segmented income statement?
5. Do you think thatCrossfire should allocate its common fixed expenses to the East andWest regions when computing the break-even points for eachregion?

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Answer to Requirement 1Companywide contribution margin ratio Contribution margin SalesCompanywide contribution margin ratio 186000 930000Companywide contribution margin ratio 20Companywide fixed expenses Traceable fixed expenses Commonfixed expensesCompanywide fixed See Answer

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	Total Company		East		West
Sales	$	930,000	$	620,000	$	310,000
Variable expenses		744,000		514,600		229,400
Contribution margin		186,000		105,400		80,600
Traceable fixed expenses		116,000		51,000		65,000
Segmentmargin		70,000	$	54,400	$	15,600
Common fixed expenses		62,000
Net operating income	$	8,000