Total Company North South $600,000 $400,000 $200,000 280,000 Sales Variable expenses. 80,000 Contribution margin . Traceable fixed expenses Segment margin Common fixed expenses. 240,000 120,000 60,000 120,000 120,000 $ 60,000 $ 60,000 50,000 Net operating income. $ 70,000
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Companywide and Segment Break-Even Analysis
Piedmont Company segments its business into two regions—North and South. The company prepared the contribution format segmented income statement as shown below:
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.
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