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: Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Total Company $750,000 500,000 250,000 240,000 Commercial $ 250,000 Residential 140,000 $ 500,000 360,00p 110,000 104,000 140,000 136,000 $ 10,000 $ 6,000 $ 4,000 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 $72,000 of common fixed expenses that would continue to be incurred even if the Commercial or Residential segments are discontinued, $55,000 of fixed expenses that would disappear if the Commercial segment is dropped, and $38,000 of fixed expenses that would disappear 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 intern'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 (c) 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 companywide 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 $15,000 and $30,000, 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. 7. Assume the company decided to pay its sales representatives in the Commercial and Residential Divisions a total monthly sa $15,000 and $30,000, respectively, and to lower its companywide sales commission percentage from 10% to 5%. Calculate the 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. Req 1 Req 2A Req 28 Req 3 Req 4 Req 5 Req 6 Req 7 Do you agree with the intern's decision to use an absorption format for her segmented Income statement? Yes No Req1 Req 2A > Residential segments: (a) sales, (b) cost of goods sold, or (c) gross margin? Cial and 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 companywide 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 $15,000 and $30,000, 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. Req 1 Req 2A Req 2B Req 3 Req 4 Req 5 Req 6 Req 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 fixed expenses $ 104,000 $ 136,000 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 ma $15,000 and $30,000, respectively, and to lower its companywide sales commission percentage from 10% to 5%. Calc 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. Req 1 R2A Req 2B Req 3 Req 4 Req 5 Req 6 Req 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? OSales OCost of goods sold Gross margin 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 mc $15,000 and $30,000, respectively, and to lower its companywide sales commission percentage from 10% to 5%. Calcu 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. Req 1 R2A Req 2B Req 3 Req 4 Req 5 Req 6 Req 7 Do you agree with the intern's decision to allocate the common fixed expenses to the Commercial and Residential segments? OYes ONO Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 28 Req 3 Req 4 Req 5 Req 6 Req 7 Redo the intern's segmented income statement using the contribution format. Variable expenses: Total variable expenses Toxaway Company Income Statement Total Company Commercial Residential 0 0 0 0 0 0 0 $ + S 0 $ 0 < Prev 7 of 15 Next > 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 Residential Division. 7. Assume the company decided to pay its sales representatives in the Commercial and Residential Divisions a total monthly s $15,000 and $30,000, respectively, and to lower its companywide sales commission percentage from 10% to 5%. Calculate the 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. Req 1 R2A Req 2B Req 3 Req 4 Req 5 Req 6 Req 7 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 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 Residential Division. 7. Assume the company decided to pay its sales representatives in the Commercial and Residential Divisions a total monthly $15,000 and $30,000, respectively, and to lower its companywide sales commission percentage from 10% to 5%. Calculate 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. Req 1 R6 2A Req 28 Req 3 Req 4 Req 5 Req 6 Req 7 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.) Commercial Division Break-even point Residential Division 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 Residential Division. 7. Assume the company decided to pay its sales representatives in the Commercial and Residential Divisions a total monthil $15,000 and $30,000, respectively, and to lower its companywide sales commission percentage from 10% to 5%. Calculate 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. Req 1 Re2A Req 28 Req 3 Req 4 Req 5 Req 6 Req 7 Assume the company decided to pay its sales representatives in the Commercial and Residential Divisions a total monthly salary of $15,000 and $30,000, 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.) Show less A Commercial Division Residential Division Break-even point