Toxaway Company is a merchandiser that segments its business into two divisions Commerclai and Residential. The compacy's accounting intem was asked to prepare segmented income statements that the company's divislonal managers coeld use to calcutate: their break-even points and make decisions. She took the pior month's compaimyide income statement and prepared the absprption format seganented income statement shown below. In preparing these statements, the intern determined that Toxaway's only variable selling and administratve expense is a 10% sales commission on all sales. The company's total fixed expenses include $70,500 of common fixed expenses that would continue to be incurred even if the Commercial or Residential segments are discontinued, $72,000 of fixed expenses that would disappear if the Commercial segment is droppedi and $50.000 of fixed expenses that would disappear if the Rosidental segment is dropped. Required: 1. Do you agree with the intem's decision to use an absorption formot for her segmented ficome statement? 2. Bosed 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 Resficentlat segments? b. Which of the following three allocation bases did she mast likehy used to aljocate common fixed expenses to the Commercal and Residentlai segments: (a) sales, (b) cost of goods sold, of (c) gross margin? 3. Do you agree with the intern's decision to allocate the common fived expenses to the Commercial and Residentiat segments? 4. Redo the intern's segmented income statement using the contribution format: 5. Compute the companywide break-even point in dollar sales 6. Compute the break even point in dollar sales for the Commercial Division and for the Residentiat Division: 7. Assume the company decided to pay its sales representatives in the Commercial and Residential Divisloms a total monthly salary of $22.000 and $44,000, respectively, and to lower its compartywide sales commission percentage from 10% to 5%. Calculate the new break-even point in doilar sales for the Commercial Division and the Residential Divesion