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 $750,000 450,000 300,000 144,000 156,000 59,000 $ 97,000 North $ 500,000 350,000 150,000 72,000 $ 78,000 South $ 250,000 100,000 150,000 72,000 $ 78,000 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. (For all requirements, round your intermediate calculations to 2 decimal places. Round your final answers to the nearest dollar.) 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

1) Dollar sales for company to break-even	$507,500
2) Dollar sales for North segment to break-even	$240,000
3) Dollar sales for South segment to break-even	$120,000

Working notes:

1, 2 & 3)	Total Company	North	South
Contribution Margin (a)	$300,000	$150,000	$150,000
Sales (b)	$750,000	$500,000	$250,000
Contribution Margin Ratio (c = a/b*100)	40.00%	30.00%	60.00%
Total Fixed Costs (d) ($144,000 + $59,000)	$203,000	$72,000	$72,000
Break-even point in dollars (d/c)	$507,500	$240,000	$120,000