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 $885,000 $295,000 $590,000 572,300 153.400 418,900 Sales Cost of goods sold Gross margin Selling and administrative expenses 312,700 276,000 141,600 122.000 171.100 154.000 Net operating Income $ 36,700 $ 19,600 $ 17.100 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 $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 Commercial segment is dropped. Required: 1. Do you agree with the intern's decision to use an absorption format for her segmented income statement? Yes 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 2-b. Do you agree with her decision to allocate the common fixed expenses to the Commercial and Residential segments? Yes No 3. Redo the intern's segmented income statement using the contribution format. Toxaway Company Income Statement Total Company Commercial Residential Variable expenses: Total variable expenses 4. Compute the companywide break-even point in dollar sales? (Round Intermediate calculations to 3 decimal places and final answer to the nearest whole dollar amount.) 5. Compute the break-even point in dollar sales for the Commercial Division and for the Residential Division (Round CM ratio to 2 decimal places and final answers to the nearest whole dollar amount.) Resident Division Brever pan 6. 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. (Round CM ratio to 2 decimal places and final answers to the nearest whole dollar amount.) Commercial Division Residential Division Break-even point