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 $ 810,000 $ 270,000 $ 540,000 coat of goods sold 548, 100 153,900 394,200 Gross margin 261,900 116,100 145,800 selling and administrative expenses 256,000 112,000 144.000 Net operating income $ 5,900 $4,100 $ 1,800 In preparing these statements, the intern determined that Toxiway's only variable seling and administrative expense is a 10% sales commissloron all sales. The company's total fixed expenses include $81,000 of common fixed expenses that would continue to be incurred even if the Commercial or Residential segments are discontinued, $58,000 of fixed expenses that would disappear if the Commercial segment is dropped, and $36,000 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 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. Reg 1 Req ZA Reg 2 Reg 3 Reg 4 Reg 5 Reg 6 Reg 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 Complete this question by entering your answers in the tabs below. Reg 1 Reg 2A Reg 28 Req3 Reg 4 Reg 5 Reg 6 Reg 2 Redo the intern's segmented income statement using the contribution format. Toxaway Company Income Statement Total Company Commercial Residential Variable expenses Total variable expenses Residential segments: (a) sales, (b) cost f 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. Reg 5 Reg 1 Reg 2A Reg 28 Reg 3 Req 4 Reg 6 Reg 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 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. Reg 1 Req 2A Reg 2B Reg 3 Reg 4 Reqs Req6 Reg 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 answer to the nearest whole dollar amount) Commercial Residential Division Division Broak-oven point 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. Req1 Reg 2 Req 28 Reg Reg 4 Reg 5 Reg 6 Reg 2 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 Commercial Residential Division Division Break-even point
