Please Answer all 7
Toxaway Company is a merchandiser that segments its business into two divisions-Commerclal and Residentlal. The company's accountling 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: In preparing these statements, the Intern determined that Toxaway's only varlable selling and administrative expense is a 10\% sales commission on all sales. The company's total fixed expenses include $73,500 of common fixed expenses that would continue to be Incurred even if the Commerclal or Residentlal segments are discontinued, $68,000 of fixed expenses that would disappear if the Commerclal segment is dropped, and $46,000 of fixed expenses that would disappear if the Residentlal segment is dropped. Requlred: 1. Do you agree with the Intern's decision to use an absorption format for her segmented Income statement? 2. Based on a revlew 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 llkely used to allocate common fixed expenses to the Commerclal and Residentlal 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 Residentlal 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 Commerclal Division and for the Residential Division. 7. Assume the company decided to pay its sales representatives in the Commercial and Residentlal Divisions a total monthly salary of $20,000 and $40,000, respectively, and to lower its companywide sales commission percentage from 10% to 5%. Calculate the new break-even point in dollar sales for the Commerclal Division and the Residential Division. Complete this question by entering your answers in the tabs below. Do you agree with the intern's decision to use an absorption format for her segmented income statement? Toxaway Company is a merchandiser that segments its business into two divisions-Commerclal and Residentlal. The company's accountling 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: In preparing these statements, the Intern determined that Toxaway's only varlable selling and administrative expense is a 10\% sales commission on all sales. The company's total fixed expenses include $73,500 of common fixed expenses that would continue to be Incurred even if the Commerclal or Residentlal segments are discontinued, $68,000 of fixed expenses that would disappear if the Commerclal segment is dropped, and $46,000 of fixed expenses that would disappear if the Residentlal segment is dropped. Requlred: 1. Do you agree with the Intern's decision to use an absorption format for her segmented Income statement? 2. Based on a revlew 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 llkely used to allocate common fixed expenses to the Commerclal and Residentlal 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 Residentlal 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 Commerclal Division and for the Residential Division. 7. Assume the company decided to pay its sales representatives in the Commercial and Residentlal Divisions a total monthly salary of $20,000 and $40,000, respectively, and to lower its companywide sales commission percentage from 10% to 5%. Calculate the new break-even point in dollar sales for the Commerclal Division and the Residential Division. Complete this question by entering your answers in the tabs below. Do you agree with the intern's decision to use an absorption format for her segmented income statement
