Problem 6-24 Companywide and Segment Break-Even Analysis; Decision Making [LO6-4, 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 Sales Cost of goods sold Company Commercial Residential $825,000 $275,000 $550,000 154,000 555,500 401,500 Gross margin Selling and administrative expenses 269,500 260,000 121,000 114,000 148,500 146,000 Net operating income $ 9,500 7,000 2,500 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 fixed expenses include $79,500 of common fixed expenses that would continue to be incurred even if the Commercial or Residential segments are discontinued, $38,000 of fixed expenses that would be avoided if the Residential segment is dropped and $60,000 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? es 0 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? mmercial Residential Common fixed expenses