Toxaway Company is a merchandiser that segments its business into two divisionsCommercial 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 $ 10,000 Commercial Residential $ 250,000 $ 500,000 140,000 360,000 110,000 140,000 104,000 136,000 $ 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 be avoided if the Commercial segment is dropped, and $38,000 of fixed expenses that would be avoided if the Residential segment is dropped. Redo the intern's segmented income statement using the contribution format. Toxaway Company Income Statement Residential Total Commercial Company $ 750,000 $ 250,000 Sales $ 500,000 Variable expenses: Cost of goods sold Sales commissions 500,000 75,000 575,000 360,000 50,000 410,000 140,000 25,000 165,000 85,000 55,000 30,000 Total variable expenses Contribution margin Traceable fixed expenses Segment margin Common fixed expenses 175,000 93,000 82,000 $ 72,000 90,000 38,000 52,000 $ Net operating income $ 10,000