Question

Problem 2: Hallow Company has two divisions: North Division and South Division. The following report is...

Problem 2:

Hallow Company has two divisions: North Division and South Division. The following report is for the most recent operating period:

North Division

South Division

Sales

$

235,000

$

192,000

Variable expenses

$

103,400

$

105,600

Traceable fixed expenses

$

80,000

$

58,000

Required:

a. Prepare a segmented income statement in the contribution format for the company.

b. What is the North Division's break-even in sales dollars?

c. What is the South Division's break-even in sales dollars?

d. What is the company's overall break-even in sales dollars?

Homework Answers

Answer #1

A. income statement

North Division South Division
Sales $235,000 $192,000
Less: Variable expenses ($103,400) ($105,600)
Less: Traceable fixed expenses ($ 80,000) ($ 58,000)
NET INCOME $51,600 $28,400

North Division's break-even

Sales $235,000
Less:Variable expenses ($103,400)
Contribution Margin $131,600
Less: Traceable fixed expenses ($80,000)
NET INCOME $51,600

South Division's break-even in sales dollars

Sales $192,000
Less:Variable expenses ($105,600)
Contribution Margin $86,400
Less: Traceable fixed expenses ($58,000)
NET INCOME $28,400

company's overall break-even in sales dollars

Sales $427,000
Less:Variable expenses ($209,000)
Contribution Margin $218,000
Less: Traceable fixed expenses ($138,000)
NET INCOME $80,000
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