Toxaway Company is a merchandiser that segments its business into two divisions-Commercial and Residentiat. The company's accounting intem was asked to prepore segmented income statements that the company's divislonal managers could use to calculate their break-even points and make decistons. She took the prior month's companywide income statement and prepared the absorption format segmented income statement shown below In preparing these statements, the intern determined that Toxiway's only variable selling and administrative expense is a 10s 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 of Residential segments are discontinued. $72.000 of fixed expenses that would disappear if the Commercial segment is dropped, and $50,000 of fixed expenses that would disappear if the Resideritial segment is dropped Required: 1. Do you agree with the intern's decision to use an absorption format for her segmented income statenent? 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 setments? b. Which of the following three allocation bases did she most likely used to allocate common fixed expenses to the Commerciat 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 sades. 6. Compute the break-even point in dollar sales for the Comnerciat 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 $,22,000 and \$44,000, 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