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Answers 1-6 are done. I need help with Number 7. Problem 7-24 Companywide and Segment Break-Even Analysis; Decision Making Toxaway Company is a merchandiser that

Answers 1-6 are done. I need help with Number 7.

Problem 7-24 Companywide and Segment Break-Even Analysis; Decision Making

Toxaway Company is a merchandiser that segments its business into two divisionsCommercial and Residential. The companys accounting intern was asked to prepare segmented income statements that the companys divisional managers could use to calculate their break-even points and make decisions. She took the prior months companywide income statement and prepared the absorption format segmented income statement shown below

Total Company

Commercial

Residential

Sales

$

870,000

$

290,000

$

580,000

Cost of goods sold

571,300

153,700

417,600

Gross margin

298,700

136,300

162,400

Selling and administrative expenses

272,000

120,000

152,000

Net operating income

$

26,700

$

16,300

$

10,400

In preparing these statements, the intern determined that Toxaways only variable selling and administrative expense is a 10% sales commission on all sales. The companys total fixed expenses include $75,000 of common fixed expenses that would continue to be incurred even if the Commercial or Residential segments are discontinued, $66,000 of fixed expenses that would be avoided if the Commercial segment is dropped, and $44,000 of fixed expenses that would be avoided if the Residential segment is dropped.

Need help with this question:

7. Assume the company decided to pay its sales representatives in the Commercial and Residential Divisions a total monthly salary of $19,000 and $38,000, 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.

Here is the answer to Req 2A. Based on a review of the interns segmented income statement, how much of the companys common fixed expenses did she allocate to the Commercial and Residential segments

Commercial

Residential

Common fixed expenses

$25,000

$50,000

Here is the answer to Req 4: Redo the interns segmented income statement using the contribution format

Toxaway Company

Income Statement

Total Company

Commercial

Residential

Sales

$870,000

$290,000

$580,000

Variable expenses:

Cost of goods sold

571,300

153,700

417,600

Sales commissions

87,000

29,000

58,000

Total variable expenses

658,300

182,700

475,600

Contribution margin

211,700

107,300

104,400

Traceable fixed expenses

110,000

66,000

44,000

101,700

$41,300

$60,400

Common fixed expenses

75,000

Net operating income

$26,700

Here is the answer to Req 5: Compute the companywide break-even point in dollar sales.

Break-even point

$760,378

Here is the answer to Req 6: Compute the break-even point in dollar sales for the Commercial Division and for the Residential Division.

Commercial Division

Residential Division

Break-even point

$178,378

$244,444

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