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 | | | | | | |
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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?
