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 Comercial Residential Sales $ 900.000 $ 300,000 $ 600,000 Cost of goods sold 579,000 153,000 426.000 Gross margin 321,000 147,000 174,000 Selling and administrative expenses 280,000 124,000 156,000 Not operating income $ 41,000 $ 23,000 $ 18,000 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, $70,000 of fixed expenses that would disappear if the Commercial segment is dropped, and $48,000 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 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 soles representatives in the Commercial and Residential Divisions a total monthly salary of $21,000 and $42,000, 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 Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Reg: maan Reg 20 Reg Reg 4 Regs Red Reg? Based on a review of the intera's segmented income statement, how much of the company's common fixed expenses did she allocate to the Commercial and Residential segments? Commercial 40.000 Residential 26.000 Common fand expenses Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. R1 DG 2A Reg 28 Rea Reg4 Reg Reqs Reg. 0 Compute the break even point in dollar sanks for the Commercia Division and for the tesidencial Division (Round CM ratio to 2 decimal places and final answer to the nearest whole llar amount) Commer Residenti Division Division broken 241020 pm $ 505 260 Res Reg7 ) Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Rea 1 Reg 2A Reg 28 Req3 Reg Reg Reg. Regs Assume the company decided to pay its sales representatives in the Commercial and Resident Divisions a total monthly salary of $21,000 and $42,000, respectively, and to lower its company de sales commission percentage from 30% 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 Commercial Residencial Division Division Break-even 8 275.000 $ 625.000 point
