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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 CompanyEastWest
Sales$930,000$620,000$310,000
Variable expenses744,000514,600229,400
Contribution margin186,000105,40080,600
Traceable fixed expenses116,00051,00065,000
Segmentmargin70,000$54,400$15,600
Common fixed expenses62,000
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?

Answer & Explanation Solved by verified expert
4.0 Ratings (627 Votes)
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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