Problem $7-24$ Companywide and Segment Break$-$Even Analysis; Decision Making $($LO$7-4,$ L$07-5]$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:TotalCompanyCommercialResidentialSales$$975,000$$$325,000$$$650,000$Cost of goods sold$663,000182,000481,000$Gross marginSelling and$312,000143,000169,000$administrative expenses$300,000134,000166,000$Net operating income$ $12,000$$$9,000$$$3,000$In preparing these statements, the intern determined that Toxaway's only variable selling and administrative expense is a $10\%$ sales commission on all sales. The company's total fixed expenses include $$64,500$ of common fixed expenses that would continue to be incurred even if the Commercial or Residential segments are discontinued, $$80,000$ of fixed expenses that would be avoided if the Commercial segment is dropped, and $$58,000$ of fixed expenses that would be avoided if the Residential segment is dropped.Required:$1.$ 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 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 likely used to allocate common fixed expenses to the Commercial and Residential 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 Residential segments?$4.$ Redo the intern's segmented income statement using the contribution format$\mathrm{.}5.$ Compute the companywide break$-$even point in dollar sales$\mathrm{.}6.$ Compute the break$-$even point in dollar sales for the Commercial Division and for the Residential Division$\mathrm{.}7.$ Assume the company decided to pay its sales representatives in the Commercial and Residential Divisions a total monthly salary of $$12,500$ and $$25,000,$ 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.