Required information [The following information applies to the questions displayed below.] Morley Products is a wholesale distributor that competes in three markets-Commercial, Home, and School. It prepared the following segmented income statement: Total Company $ 20,000,000 100.0% Commercial Market $ 8,000,000 Home Market $ 5,000,000 School Market $ 7,000,000 Sales Less expenses: Cost of goods sold Sales support Order processing Warehousing Packing and shipping Advertising General management Total expenses Net operating income 9,500,000 3,600,000 1,720,000 940,000 520,000 1,690,000 1,310,000 19, 280,000 $ 720,000 47.5% 18.0% 8.6% 4.7% 2.6% 8.5% 6.5% 96.4% 3.6% 3,900,000 1,440,000 688,000 376,000 208,000 676,000 524,000 7,812,000 $ 188,000 2,400,000 900,000 430,000 235,000 130,000 422,500 327,500 4,845,000 $ 155,000 3,200,000 1,260,000 602,000 329,000 182,000 591,500 458,500 6,623,000 $ 377,000 Although the Commercial Market has the highest sales, it reports much lower profit than the School Market. Therefore, management is considering shifting attention and resources away from the Commercial Market and towards the School Market. They have asked for your recommendation how to proceed. You have decided to create a properly formatted segmented income statement. To assist in this endeavor, you have gathered the following information: a. The cost of goods sold figures shown in the income statement above are traceable to their respective markets. b. Sales support, order processing, and packing and shipping are variable costs. Warehousing, general management, and advertising are fixed costs. In the income statement above, all of these costs have been allocated to the three markets on the basis of sales dollars. c. Using your knowledge of activity-based costing, you have compiled the following data: Amount of Activity Cost Pool and (Allocation Base) Sales support number of calls) Order processing (number of orders) Warehousing (square feet of space) Packing and shipping (pounds shipped) Total Cost $ 3,600,000 $ 1,720,000 $ 940,000 $ 520,000 Commercial Market 8,000 1,750 35,000 24,000 Home Market School Market 5,000 11,000 5,200 1,650 65,000 17,500 16,000 64,000 Total 24,000 8,600 117,500 104,000 d. You have also determined the following breakdown of the company's advertising expense and general management expense: Commercial Market Total Home Market School Market $ 700,000 $ 180,000 $ 580,000 Advertising: Traceable Common General management: Traceable salaries Common $ 1,460,000 $ 230,000 $ 410,000 $ 900,000 $ 150,000 $ 120,000 $ 140,000 Required: 1. Refer to the data in part (c) above. Calculate an activity rate for each cost pool. Then, using those rates, allocate each cost pool to the company's three markets. 2. Prepare a revised contribution format segmented income statement for the company. Include an "Amount" column and a "Percent" column for the company as a whole and for each market segment