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:

	Total Company	Commercial	Residential
Sales	$	795,000		$	265,000		$	530,000
Cost of goods sold		535,300			148,400			386,900
Gross margin		259,700			116,600			143,100
Selling and administrative expenses		252,000			110,000			142,000
Net operating income	$	7,700		$	6,600		$	1,100

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 $82,500 of common fixed expenses that would continue to be incurred even if the Commercial or Residential segments are discontinued, $34,000 of fixed expenses that would be avoided if the Residential segment is dropped, and $56,000 of fixed expenses that would be avoided if the Commericial segment is dropped.

I need help with number 3. I copied the chart for it, because my question got canceled last time.

Sales Variable Expenses: Sales Commissions Cost of Goods Sold Company Income Statement Total Company Commercial Residential $ 795,000 $ 265,000 $ 530,000 79,500 535,300 26,500 148,400 53,000 386,900 Total Variable Expenses Contribution Margin Traceable Fixed Expenses Segment Margin Common Fixed Expenses 614,800 180,200 174,900 90,100 439,900 ### Net Operating Income 124,200 180,200 $ 56,100 $ 7,600