Question

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

		Total Company			North			South
Sales	$	750,000		$	500,000		$	250,000
Variable expenses		450,000			350,000			100,000
Contribution margin		300,000			150,000			150,000
Traceable fixed expenses		138,000			69,000			69,000
Segment margin		162,000		$	81,000		$	81,000
Common fixed expenses		60,000
Net operating income	$	102,000

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.)

Answer 1

	Total Company	North	South
Contribution margin	300000	150000	150000
Divide by Sales	750000	500000	250000
Contribution margin ratio	40%	30%	60%
Break even point = Fixed expenses/Contribution margin ratio
1
Companywide break-even point	495000	=(138000+60000)/40%
2
Break-even point for the North region	230000	=69000/30%
3
Break-even point for the South region	115000	=69000/60%