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please show work Toxaway Company is a merchandiser that segments its business into two dvisions - Commercial and Residential The company's accounting intern was asked
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Toxaway Company is a merchandiser that segments its business into two dvisions - Commercial and Residential The company's accounting intern was asked to prepare segmented income statements that the companys divisionai managers could use to caicuiate their break even points and make decisjons. She took the phor month's compunywde income statement and preparcd the absorption format segmented income statement shown below. In prepaing these statements, the intern determined that Toxaways onily vanable seling and admistrative expense is a 10\% sales commission on all sales The companys total fixed expenses include $66,000 of common fued expenses that would continue to be incurred even if the Commercal or Residential segments are ascontunued, $78.000 of fored expenses that would dsoppear if the Commetchat segment is dropped, and $56,000 of foxed expenses that would disappeat if the Residentral segment is drogped Requirect: 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 intern's segmented income statement a How much of the companys common fixed expenses did she allocate to the Commercial and Residentiai segmerts? b. Which of the following three allocation bases did she most ikxely used lo allocate common fixed expenses to the Commerciat and Residental segments (D) soles, (D) cost of goods sold, or (C) gross margin? 3 Do you agree with the intern's decision to aliocate the common fored expenses to the commerciar and Residential segmis its? 4 Redo the intern's segmenied income statement using the contribution format 5 Compute the companywde break even point in dollar sales. 6. Compute the breakeven point in dollar sales for the Commercial Divsion and for the Resudentio: Division. 7 Assume the compariy decided to pay its cales representatives in the Commeicial and Residential Divisions a total monthly salary of $25,000 and $50.000, respectively, and to lower its companymide sales corrmssion percentage from 10% to 5%. Cakculate the new breakeven point in doilar sales for the Commercial Division and the Residential ONision Complete this question liy entering vour answers in the tabs below. Assume the company decided to pay its sales representatives in the Commercial and Residential Divisions a total monthly salary of $25,000 and $50,000, 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.) Step by Step Solution
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