Bb Practice Quizzes (PQ) - BMG 207: x * Homework Help - Q&A from Onl x Homework #4 X + C https:/ewconnect.mheducation.com/flow/connect.html G Homework #4 i Saved Help Save & Exit Submit 4 Check my work Toxaway Company is a merchandiser that segments its business into two divisions-Commercial and Residential. The company's 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: points Total Company Commercial Residential Sales $ 750, 000 250, 000 500, 000 eBook Cost of goods sold 500 , 000 140, 000 360 , 000 Gross margin 250, 000 110, 000 140 , 000 Print Selling and administrative expenses 240 ,000 104 , 006 136, Net operating income 10, 000 $ $ 6, 000 $ 4, 000 References 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 $72,000 of common fixed expenses that would continue to be incurred even if the Commercial or Residential segments are discontinued, $55,000 of fixed expenses that would be avoided if the Commercial segment is dropped, and $38,000 of fixed expenses that would be avoided 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? 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? o. 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 intern's decision to allocate the common fixed expenses to the Commercial and Residential segments? 4. Redo the intern's segmented income statement using the contribution format. 5 Computa the camnamisaida hreal/ awan paint in dollar sales MC Graw Hill ducation O Type here to search 12:11 AM 1/22/2019m PracticeQuines(PQ)BMGZOT x l u Homework Heip-oammm On x a HomeworkM x + x (- -) O i httszfnewconnectimheducation.comfowfconnect.htm| 6 25'\" n G E Homework #4 0 Saved Help Save & Exit Submit Che: R my work | 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 interns segmented income statement 1 a How much ofthe company's common fixed expenses did she allocate to the CommerCial and Residential segments7 to. Which otthe following three allocation bases did she most likely used to allocate common fixed expensesto the CommerCial and mm\" Residential segments (a) sales, [b] cost of goods sold. or [c] gross margin? 3. Do you agree With the intern's deCI5ion to allocate the common fixed expensesto the CommerCIal and ReSidential segments? gawk 4. Redo the interns segmented income statement using the contribution format 5 Compute the companyWIde breakeeven pomt in dollar sales Film 6. Compute the break-even point in dollar sales for the CommerCial Division and for the Residential Division. Pe'erences 7 Assume the company deCIded to pay its sales representatives in the CommerCial and Residential DiVIsions a total monthly salary of $15,000 and $30,000, respectively, and to lower its companywide sales commission percentage from 10% to 5%. Calculate the new breakeeven point in dollar sales for the Commercial DiVision and the Qesidential DiVision Complete this question by entering your answers in the tabs below. REC! 1 Reg 2A Reg 23 REC] 3 Reg 4 Reg 5 Reg 6 Reg 7 Redo the intern's segmented income statement using the contribution format. Here >
