EXAM O Pedmont Compony segments ts busainess into wo regons North and South: The

Question

EXAM O Pedmont Compony segments ts busainess into wo regons North and South: The conparty prepared the combution fermust segmented income statement is shown 975,000 ConteSbution nargin ss,009 195,030195,000 162,000 228,000 $6se,een $125,000 Variable wspmses Traceable fixed segment argin Net operating ?1 ,eee ??.aee $114,08 $114,000 s 158,880 Required: 1 Compde the companyw de break-even porm in dolgr sales 2 Compute the treak even posr salee for the North 3 Compute the break even pon cularsakes for the Souh regon IFor al equbementa, round your imermediee sakculeoots to 2 decimal places Round your final anawers to the neaceer dollw b 0

Explanation / Answer

Answer 1:- CM ratio of the whole company = CM / Sales = 390000 / 975000 = 0.4

Companywide BEP in dollar sales = Fixed expenses / CM ratio = ( 162000 + 50000 ) / 0.40 = $ 530000

Answer 2 :- North region BEP in dollar sales = Fixed expenses / CM ratio = 81000 / 0.30 = $ 270000

195000 / 650000 = 0.30

Answer 3 :- South region BEP in dollar sales = Fixed expenses / CM ratio = 81000 / 0.60 = $ 135000

195000 / 325000 = 0.60

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