10 3 pant accounting intern was asked to prepare segmented income statements that the company's divisional managers could use to calculate their break-even points and make decisions. She took the prior month's companywide income statement and prepared the absorption format segmented income statement shown below: Sales Commercial Residential fatal Company $840,000 $ 280,000 $560,088 Cast of goods sold 557,200 154,000 403,200 Gross margin 282,000 125,000 156,800 Selling and advinistrative expesses effook Het operating Incu 164,000 $10,000 136,000 140,000 $10,000 $8,800 H Pr In preparing these statements, the Intern determined that Toxaway's only variable selling and administrative expense is a 10% sales commission on all sales. The company's total fixed expenses include $78,000 of common fixed expenses that would continue to be incured even if the Commercial or Residential segments are discontinued. $62.000 of fixed expenses that would disappear if the Commercial segment is dropped, and $40,000 of fixed expenses that would disappear if the Residential segment is dropped Required: 1. Do you agree with the intern's decision to use an absorption format for her segmented income statement? 2. Based on a review of the intern's segmented income statement a. How much of the company's common fixed expenses did she allocate to the Commercial and Residential segments? Which of the following three allocation bases did she most likely used to allocate common fixed expenses to the Commercial and Residential segments: (a) sales, (b) cost of goods sold, or (c) gross margin? 3. Do you agree with the intem's decision to allocate the common fixed experses to the Commercial and Residential segments? 4. Redo the intern's segmented income statement using the contribution format 5. Compute the companywide break even point in dollar sales 6. Compute the break even point in dollar sales for the Commercial Division and for the Residential Division 7 Assume the company decided to pay its sales representatives in the Commercial and Residential Divisions a total monthly salary of $17000 and $34.000, respectively, and to lower its companywide sales commission percentage from 10% to 5% Calculate the new break-even point in dollar sales for the Commercial Division and the Residential Division Check my work