eztomheducation.com Toxaway Company is a merchandiser that segments its business into two divisions Commercial and Residential. The company's accounting intem 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 Cost of goods sold Total Company $1,050,000 682,500 Commercial $350,000 178,500 Residential $700.000 504,000 Gross margin Selling and administrative expenses 367,500 320,000 171,500 144,000 196,000 176,000 Net operating income $ 47.500 $ 27,500 $ 20,000 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 foed expenses include $57,000 of common fixed expenses that would continue to be incurred even if the Commercial or Residential segments are discontinued, $68,000 of fixed expenses that would be avoided if the Residential segment is dropped, and $90,000 of fixed expenses that would be avoided if the Commercial segment is dropped. Required: 1. Do you agree with the intern's decision to use an absorption format for her segmented income statement? Yes No 2-a. Based on the intern's segmented income statement, can you determine how she allocated the company's common food expenses to the Commercial and Residential segments? Commercial Residential Common fixed expenses 2-b. Do you agree with her decision to allocate the common foxed expenses to the Commercial and Residential segments? Yes No 3. Redo the intern's segmented income statement using the contribution format Toxaway Company Income Statement Total Company Commercial Residential 17 AM Sat Jun 20 ezto meducation.com 3. Redo the intern's segmented income statement using the contribution format. Toxaway Company Income Statement Total Company Commercial Residential Variable expenses: Total variable expenses 4. Compute the companywide break-even point in dollar sales? (Round intermediate calculations to 3 decimal places and final answer to the nearest whole dollar amount.) Break-even point 5. Compute the break-even point in dollar sales for the Commercial Division and for the Residential Division. (Round CM ratio to 2 decimal places and final answers to the nearest whole dollar amount.) Commercial Division Residential Division Break-even point 6. Assume the company decided to pay its sales representatives in the Commercial and Residential Divisions a total monthly salary of $17.500 and $35,000, respectively, and to lower its companywide sales commission percentage from 10% to 5% Calculate the new break-even point in dollar sales for 5. Compute the break-even point in dollar sales for the Commercial Division and for the Residential Division (Round CM ratio to 2 decimal places and final answers to the nearest whole dollar amount.) Commercial Division Residential Division Break-even point 6. Assume the company decided to pay its sales representatives in the Commercial and Residential Divisions a total monthly salary of $17.500 and $35,000, 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 (Round CM ratio to 2 decimal places and final answers to the nearest whole dollar amount.) Commercial Division Residential Division Break-even point References eBook & Resources Worksheet Learning Objective: 06-04 Prepare a segmented income statement that differentiates traceable fixed costs from common foxed costs and use it to make decisions Difficulty: 2 Medium Learning Objective: 06-05 Compute company wide and segment break-even points for a company with traceable fixed costs Check my work eztomheducation.com Toxaway Company is a merchandiser that segments its business into two divisions Commercial and Residential. The company's accounting intem 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 Cost of goods sold Total Company $1,050,000 682,500 Commercial $350,000 178,500 Residential $700.000 504,000 Gross margin Selling and administrative expenses 367,500 320,000 171,500 144,000 196,000 176,000 Net operating income $ 47.500 $ 27,500 $ 20,000 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 foed expenses include $57,000 of common fixed expenses that would continue to be incurred even if the Commercial or Residential segments are discontinued, $68,000 of fixed expenses that would be avoided if the Residential segment is dropped, and $90,000 of fixed expenses that would be avoided if the Commercial segment is dropped. Required: 1. Do you agree with the intern's decision to use an absorption format for her segmented income statement? Yes No 2-a. Based on the intern's segmented income statement, can you determine how she allocated the company's common food expenses to the Commercial and Residential segments? Commercial Residential Common fixed expenses 2-b. Do you agree with her decision to allocate the common foxed expenses to the Commercial and Residential segments? Yes No 3. Redo the intern's segmented income statement using the contribution format Toxaway Company Income Statement Total Company Commercial Residential 17 AM Sat Jun 20 ezto meducation.com 3. Redo the intern's segmented income statement using the contribution format. Toxaway Company Income Statement Total Company Commercial Residential Variable expenses: Total variable expenses 4. Compute the companywide break-even point in dollar sales? (Round intermediate calculations to 3 decimal places and final answer to the nearest whole dollar amount.) Break-even point 5. Compute the break-even point in dollar sales for the Commercial Division and for the Residential Division. (Round CM ratio to 2 decimal places and final answers to the nearest whole dollar amount.) Commercial Division Residential Division Break-even point 6. Assume the company decided to pay its sales representatives in the Commercial and Residential Divisions a total monthly salary of $17.500 and $35,000, respectively, and to lower its companywide sales commission percentage from 10% to 5% Calculate the new break-even point in dollar sales for 5. Compute the break-even point in dollar sales for the Commercial Division and for the Residential Division (Round CM ratio to 2 decimal places and final answers to the nearest whole dollar amount.) Commercial Division Residential Division Break-even point 6. Assume the company decided to pay its sales representatives in the Commercial and Residential Divisions a total monthly salary of $17.500 and $35,000, 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 (Round CM ratio to 2 decimal places and final answers to the nearest whole dollar amount.) Commercial Division Residential Division Break-even point References eBook & Resources Worksheet Learning Objective: 06-04 Prepare a segmented income statement that differentiates traceable fixed costs from common foxed costs and use it to make decisions Difficulty: 2 Medium Learning Objective: 06-05 Compute company wide and segment break-even points for a company with traceable fixed costs Check my work