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Crossfire Company - Segment break-even - 23 Apr, 2020

EXERCISE 6-10 Companywide and Segment Break-Even Analysis

Crossfire Company segments its business into two regions-East and West. The company prepared the contribution format segmented income statement shown below:

Total

                                                                                Company             East                        West

Sales . . . . . . . . . . . . . . . . . . . . . . . .             $900,000              $600,000            $300,000

Variable expenses . . . . . . . . . . . . . . .         675,000                480,000                195,000

Contribution margin . . . . . . . . . . . . . .      225,000                 120,000               105,000

Traceable fixed expenses . . . . . . . . . .       141,000                50,000                  91,000

Segment margin . . . . . . . . . . . . . . . . .       84,000                   $ 70,000              $ 14,000

Common fixed expenses . . . . . . . . . .        59,000

Net operating income . . . . . . . . . . . . .      $ 25,000

Required:

1. Compute the companywide break-even point dollar in 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 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?



Category : Management Accounting

Search Keywords :
Crossfire , Segment , Brekeven , Companywide , East , West , Traceable , Margin 


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Answer  - 23 Apr, 2020
Please see the excel attachment....


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