Toxaway Company is a merchandiser that segments its business into two divisions-Commercial and Residential. The company's accounting intem 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 CompanyCommercial Residential Sales Cost of goods sold $975,000 $325,000 $650,000 182,000 481,000 663,000 Gross margin 312,000143,000 169,000 Selling and administrative expenses 300,000 134,000 166,000 Net operating income 12,000 9,000 3,000 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 $64,500 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 be avoided if the Residential segment is dropped and $80,000 of fixed expenses that would be avoided if the Commericial segment is dropped. Required: 1. Do you agree with the intern's decision to use an absorption format for her segmented income statement? Ye 2-a. Based on the intern's segmented income statement can you determine how she allocated the company's common fixed expenses to the Commercial and Residential segments? Commercial Residential Common fixed expenses