100 341 PM eztomheducationcom Eli sprint Piedmont Company

@ * 100%-. + 3:41 PM ezto.mheducation.com Eli sprint Piedmont Company segments its business into two regions- North and South. Th e company prepared the contribution format segmented income statement shown below: Total South $812,500 $850,000 $162,500 Company North 552,500 520,00032.500 260,000 130,000 130,000 Sales Variable expenses Contribution margin Traceable fixed expenses 67.000 67,000 134,000 26,000 63.000 63,000 54,000 72,000 Segment margin Common fixed expenses Net operating income Required 1 Compute the companywide break-even point in dollar sales 2. Compute the break-even point in dollar sales for the North region to 3. Compute the break-even point in dollar sales for the South region. (Round your break-even dollar sales to the nearest whole number.)

Solution

Answer

1.

Contribution Margin percent = (Contribution Margin / Total sales) * 100

= (260,000 / 812,500) * 100

Contribution Margin = 32%

Companywide Breakeven point (In Sales) = Total Fixed cost / Contribution Margin Percent

= $188,000 / 32%

Companywide Breakeven point (In Sales) = $587,500

2.

Contribution Margin percent of North = (Contribution Margin / Total sales) * 100

= (130,000 / 650,000) * 100

Contribution Margin percent of North = 20%

North Breakeven point (In Sales) = Traceable Fixed cost of North / Contribution Margin Percent

= $67,000 / 20%

North Breakeven point (In Sales) = $335,000

3.

Contribution Margin percent of South = (Contribution Margin / South sales) * 100

= (130,000 / 162,500) * 100

Contribution Margin percent of South = 80%

South Breakeven point (In Sales) = Traceable Fixed cost of South / Contribution Margin Percent

= $67,000 / 80%

South Breakeven point (In Sales) = $83,750

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