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 $ 975,000 $ 650,000 $ 325,000
Variable expenses 682,500 487,500 195,000
Contribution margin 292,500 162,500 130,000
Traceable fixed expenses 156,000 68,000 88,000
Segment margin $ 136,500 $ 94,500 $ 42,000
Common fixed expenses 60,000
Net operating income $ 76,500
Required:
1. Compute the companywide break-even point in dollar sales. (Round intermediate calculations to two decimal places.)
2. Compute the break-even point in dollar sales for the East region. (Round intermediate calculations to two decimal places.)
3. Compute the break-even point in dollar sales for the West region. (Round intermediate calculations to two decimal places.)
4. Prepare a new segmented income statement based on the break-even dollar sales that you computed in requirements 2 and 3. (Round intermediate calculations to two decimal places.)
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?
A. Yes
B. No