Crossfire Company segments its business into two regions�East and West. The company prepared the contribution format segmented income statement shown below: Total
Company EastWest
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 in dollar sales. (Round intermediate calculations to 2 decimal places)
2. Compute the break-even point in dollar sales for the East region. (Round intermediate calculations to 2 decimal places
3. Compute the break-even point in dollar sales for the West region. (Round intermediate calculations to 2 decimal places)
4. Prepare a new segmented income statement based on the break-even dollar sales that you computed in requirements 2 and 3.
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?