Question
Total Company Commercial Residential Sales $ 885,000 $ 295,000 $ 590,000 Cost of goods sold 572,300 153,400 418,900 Gross margin 312,700 141,600 171,100 Selling and
Total Company | Commercial | Residential | |||||||
Sales | $ | 885,000 | $ | 295,000 | $ | 590,000 | |||
Cost of goods sold | 572,300 | 153,400 | 418,900 | ||||||
Gross margin | 312,700 | 141,600 | 171,100 | ||||||
Selling and administrative expenses | 276,000 | 122,000 | 154,000 | ||||||
Net operating income | $ | 36,700 | $ | 19,600 | $ | 17,100 | |||
Toxaway Company is a merchandiser that segments its business into two divisionsCommercial and Residential. The companys accounting intern was asked to prepare segmented income statements that the companys divisional managers could use to calculate their break-even points and make decisions. She took the prior months companywide income statement and prepared the absorption format segmented income statement shown below: Total Company Commercial Residential Sales $ 885,000 $ 295,000 $ 590,000 Cost of goods sold 572,300 153,400 418,900 Gross margin 312,700 141,600 171,100 Selling and administrative expenses 276,000 122,000 154,000 Net operating income $ 36,700 $ 19,600 $ 17,100 In preparing these statements, the intern determined that Toxaways only variable selling and administrative expense is a 10% sales commission on all sales. The companys total fixed expenses include $73,500 of common fixed expenses that would continue to be incurred even if the Commercial or Residential segments are discontinued, $46,000 of fixed expenses that would be avoided if the Residential segment is dropped, and $68,000 of fixed expenses that would be avoided if the Commericial segment is dropped. Compute the companywide break-even point in dollar sales? Compute the break-even point in dollar sales for the Commercial Division and for the Residential Division. Assume the company decided to pay its sales representatives in the Commercial and Residential Divisions a total monthly salary of $20,000 and $40,000, 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 need help with the break even for the company. I cant seem to get it right, and the expert answer was wrong as well.
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