Exercise 6-10.docx - Exercise 6-10 Companywide and Segment Break-Even Analysis[LO6-5 Crossfire Company segments its business into two regions\u2014East and

Exercise 6-10.docx - Exercise 6-10 Companywide and Segment...

This preview shows page 1 - 2 out of 2 pages.

Exercise 6-10 Companywide and Segment Break-Even Analysis [LO6-5] 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 West Sales \$ 750,000 \$ 500,000 \$ 250,000 Variable expenses 525,000 375,000 150,000 Contribution margin 225,000 125,000 100,000 Traceable fixed expenses 140,000 60,000 80,000 Segment margin 85,000 \$ 65,000 \$ 20,000 Common fixed expenses 70,000 Net operating income \$ 15,000 Required: 1. Compute the companywide break-even point in dollar sales. CM Ratio = Contribution Margin / Sales = \$225,000 / \$750,000 = 0.3 or 30% Total Fixed Costs: Traceable: 140,000 Common: 70,000 210,000 Break-even in Dollars = \$700,000 2. Compute the break-even point in dollar sales for the East region. CM Ratio = Contribution Margin / Sales = 125,000 / 500,000 = 0.25 Traceable Fixed Expenses: 60,000 Break-even in dollars = 240,000 3. Compute the break-even point in dollar sales for the West region. CM Ratio = Contribution Margin / Sales = 100,000 / 250,000

You've reached the end of your free preview.

Want to read both pages?

• Fall '15
• Western United States, Crossfire Company

What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern

Stuck? We have tutors online 24/7 who can help you get unstuck.
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes