Business, 31.05.2020 01:02 samueltaye
Exercise 7-10 Companywide and Segment Break-Even Analysis [LO7-5]Crossfire Company segments its business into two regions—East and West. The company prepared a contribution format segmented income statement as shown below: Total Company East WestSales$900,000 $600,000 $300,000Variable expenses 675,000 480,000 195,000Contribution margin 225,000 120,000 105,000Traceable fixed expenses 141,000 50,000 91,000Segment margin 84,000 $70,000 $14,000Common fixed expenses 59,000 Net operating income$25,000 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 Crossfire’s 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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Exercise 7-10 Companywide and Segment Break-Even Analysis [LO7-5]Crossfire Company segments its busi...
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