Question

Piedmont Company segments its business into two regions-North and South. The company prepared the contribution format segmented income statement as shown: Sales Variable expenses Contribution margin Traceable fixed expenses Segment margin Common fixed expenses Net operating income Total Company $ 600,000 360,000 240,000 120,000 120,000 50,000 $ 70,000 North $ 400,000 280,000 120,000 60,000 $ 60,000 South $ 200,000 80,000 120,000 60,000 $ 60,000 Required: 1. Compute the companywide break-even point in dollar sales. 2. Compute the break-even point in dollar sales for the North region. 3. Compute the break-even point in dollar sales for the South region. 1. Dollar sales for company to break-even 2. Dollar sales for North segment to break-even 3. Dollar sales for South segment to break-even

Answer 1

Sale Variabel Expenses Contribution Margin Traceable Fixed Expenses Terrotorial Segmented Margin common Fixed Cost Net operating Income Total Company Amount 600000 360000 240000 120000 120000 50000 70000 Divisions North South Amount | Amount 400000 200000 280000 80000 120000 120000 60000 60000 60000 60000 Sales Contribution Margin Contribution Margin Ratio (CM/ Sales ) Fixed Cost Total Company North 600000 240000 40.0% 170000 south 400000 120000 30.0% 60000 200000 120000 60.0% 60000 Break Even Point in Dollars = Fixed Cost / CM Ratio Answers Total Company (170000/40%) North (60000/30%) south 160000/60%) 425000 Dollars 200000 Dollars 100000 Dollars