Problem 6-24 Companywide and Segment Break-Even Analysis; Decision Making ILO6-4, LO6-5] 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: Total Company Commercial Residential Sales $960,000 $320,000 $640,000 636,800 169,600 Cost of goods sold 467,200 323,200 172,800 Gross margin 150.400 296,000 164,000 Selling and administrative expenses 132,000 Net operating income 27,200 18,400 8,800 In preparing these statements the intern determined that Toxaway's only variable selling and administrative expense is a 10% sales commission on a sales. The company's total fixed expenses include $66,000 of common fixed expenses that would continue to be incurred even if the Commercial or Residential segments are discontinued, $56,000 of fixed expenses that would be avoided if the Residential segment is dropped, and $78,000 of fixed expenses that would be avoided if the Commericial segment is dropped Required: 1. Do you agree with the intern's decision to use an absorption format for her segmented income statement? No 2-a. Based on the intern's segmented income statement, can you determine how she allocated the company's common fixed expenses to the Commercial and Residential segments? Commercial Residential Common fixed expenses 22,000 44.000