Chapter 5, Problem 5.10E

To determine

Concept introduction:

Break-even point (BEP):

Break-Even point or BEP is the level of output at which the total sales is equal to the total cost. The BEP means there are no operating income and no operating losses. It is a very important management tool as the management use this point as the minimum sales required for business survival.

Requirement 1:

Calculate the companywide break-even point for Company C.

To determine

Break-even point (BEP):

Break-Even point or BEP is the level of output at which the total sales is equal to the total cost. The BEP means there are no operating income and no operating losses. It is a very important management tool as the management use this point as the minimum sales required for business survival.

Requirement 2:

Calculate the east region break-even point for Company C.

To determine

Break-even point (BEP):

Break-Even point or BEP is the level of output at which the total sales is equal to the total cost. The BEP means there are no operating income and no operating losses. It is a very important management tool as the management use this point as the minimum sales required for business survival.

Requirement 3:

Calculate the west region break-even point for Company C.

To determine

Concept introduction:

Income statement:

The income statement tells about the revenues earned and expenses incurred by the company in a specific period of time. It is also known as operations statement, earnings statement, revenue statement or profit, and loss statement.

Requirement 4:

Prepare an income statement for the break-even sales.

To determine

Concept introduction:

Variable costing:

The method of costing where only variable costs are charged to the products is called as variable costing. The fixed overheads are charged to the units which are sold.

Requirement 5:

:

Comment whether the company should allocate the common cost to the two departments or not.