Question

Piedmont Company segments its business into two regions-North and South. The company prepared the contribution format segmented income statement shown below::
Total Company North South

Sales $ 750,000 $ 600,000 $150,000

Variable expenses 510,000 480,000 30,000

Contribution margin 240,000 120,000 120,000

Traceable fixed expenses 128,000 64,000 64,000

Segment margin 112,000 56,000 56,000

Common fixed expenses 54,000

Net operating income $ 58,000

Required: 1. Compute the companywide break-even point in dollar sales.

Dollar sales for company to break-even

2. Compute the break-even point in dollar sales for the North region.



Dollar sales for a segment to break-even

3. Compute the break-even point in dollar sales for the South region.

Dollar sales for a segment to break-even

Answer 1

Answer:

The Dollar sales break even for the company is $568750, for the north region is $320000 and for the south region is $80000.

Explanation:

1. for the company:

cont margin ration = contribution/sale

                               = 240000/750000

                               = 0.32

fixed cost = 182000

dollar sales break even = fixed cost/cont margin ratio

                                       = 182000/0.32

                                       = $568750

2.  for the north region:

cont margin ration = contribution/sale

                               = 120000/600000

                               = 0.20

fixed cost = 64000

dollar sales break even = fixed cost/cont margin ratio

                                       = 64000/0.20

                                       = $320000

3. for the south region:

cont margin ration = contribution/sale

                               = 120000/150000

                               = 0.80

fixed cost = 64000

dollar sales break even = fixed cost/cont margin ratio

                                       = 64000/0.80

                                       = $80000

Therefore, The Dollar sales break even for the company is $568750, for the north region is $320000 and for the south region is $80000.