Company is a merchandiser that segments its business into accounting intern was asked to prepare segmented income statements that the two divisions-Commercial and Residential/ The company's their break even points and make decisions She took the prior month's companywide income statement and prepared format segmented income statement shown below company's divisional managers couid use to calculate Sales Coat of goods sold Gross margin Se1ling and administrative expenses Net operating inoome $ 930,000 310,000 620,000 623. 10-179. soo 452,600 139, 500 2e.000128,00060.00 18,900 $11,SOO 7.100 306, 900 167,400 in preparing these statements, the intern determined that Toxaway's only varlable seling and administrat commission on all sales. incurred even if the Commericial segment is dropped, and $52000 of fixed expenses that wouid be avoided it the Residential segment is dtropped ive expense is a t0% sales The company's total fixed expenses include $69,000 of common fixed expenses that would continue to be nces ommercial or Residential segments are discontinued, $74,000 of fixed expenses that would be avoided if the Required: 1. Do you agree with the interm's decision to use an absorption format for her segmented incone 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? b. 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 interm'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 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 $23,000 and $46,000 respectively, and to lower its company ide sales commission percentage rom 10% to 5% Cakulate te new break-even point in dollar sales for the Commercial Division and the Residential Division Complete this question by entering your answers in the tabs b Req 1 Rea 2A Req 2B Req 4 Req 5 Rig 6 Rea 7 Oo you agree with the interm's decision to use an absorption format for her sugmernted income statement