Toxaway Company is a merchandiser that segments its business into two divisions-Commercial and Residential The company's accounting intem 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 Comercial Residential Sales $ 990,000 $330.000 $60. DOD Cost of goods sold 663.300 181.500 481.800 GLOSS Marcin 326. TOD 14B. 300 178.300 Selling and administrative experte 304.000 196.000 1dB.000 Het aparating income $22. TOD 12.500 10.200 In preparing these statements, the intem determined that Towaway's only variable selling and administrative expense is a 10% sales commission on all sales. The company's total fixed expenses include 563,000 of common foed expenses that would continue to be incurred even if the Commercial or Residential segments are discontinued, $82.000 of fived expenses that would be avoided if the Commercial segment is dropped, and $60,000 of fived 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 intem'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 (o 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. 5. Compute the company wide break-even point in dollar sales. 6. Compute the break-even point in dollar sales for the Commercial Division and for the Residential Division 7. Assume the company decided to pay its sales representatives in the Commercial and Residential Divisions a total monthly salary of $13,500 and $27.000, 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 Complete this question by entering your answers in the tabs below. Reg 1 Reg 24 Res 20 Reg 3 Reg+ Req Rego Req7 Do you agree with the intern's decision to use an absorption format for her segmented income statement? Yes ONG Regi Red 2A Reg 28 Reg 3 Reg 4 Reg 5 Reg 6 Reg 7 Based on a review of the intern's segmented income statement, how much of the company's common fixed expenses did she allocate to the Commercial and Residential segments? Commercial Residential Common fed expenses Reg 1 Red 2A Reg 28 Reg 3 Reg 4 Reg 5 Reg 6 Reg 7 Based on a review of the intern's segmented income statement, which of the following three allocation bases did she most likely used to allocate common fixed expenses to the Commercial and Residential segments? Sales Cost of goods sold Gross margin Reg1 Reg 2A Reg 28 Req3 Reg 4 Reg 5 Reg 6 Reg 7 Do you agree with the intern's decision to allocate the common fixed expenses to the Commercial and Residential segments? Yes No Reg1 Reg 2A Reg 28 Reg 3 Reg 4 Regs Reg 6 Reg 7 Redo the intern's segmented income statement using the contribution format. Toxaway Company Income Statement Total Commercial Residential Company Variable expenses Total variable expenses 0 0 0 0 0 0 0 $ 05 0 Reg 1 Reg 2A Reg 28 Req3 Reg 4 Reg 5 Reg 6 Reg 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.) Break-even point Reg! Red 2A Reg 28 Req3 Reg 4 Reg 5 Reg 6 Req7 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 answer to the nearest whole dollar amount.) Commercial Residential Division Division Break-even point