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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

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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: Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Total Company $ 780,000 517.400 262,600 248,000 $ 14,600 Commercial Residential $ 260,000 $ 520,000 143,000 374,400 117,000 145,600 108,000 140,000 $ 9,000 $ 5,600 In preparing these statements, the intern determined that Towaway's only variable selling and administrative expense is a 10% sales commission on all sales. The company's total fixed expenses include $84,000 of common fixed expenses that would continue to be incurred even if the Commercial or Residential segments are discontinued, $54,000 of fixed expenses that would disappear if the Commercial segment is dropped, and $32,000 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 $13,000 and $26,000, 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 Reg 2A Reg 28 Req3 Reg 4 Reqs Req6 Reg 7 Do you agree with the intern's decision to use an absorption format for her segmented Income statement? Yes NO Red 2A > Complete this question by entering your answers in the tabs below. Reg Reg 2A Reg 28 Req? Reg 3 Reg 4 Req5 Reg 6 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 foued expenses (Regt Req 20 > Complete this question by entering your answers in the tabs below. Han 1 Rg2A Bef? Req3 Reg 4 Reg 5 Reg 6 Req7 Based on a review of the intern's segmented Income statement which of the following three allocation bases did she most likely used to allocate common fixed expenses to the Commercial and Residential segments? Cont of goods sold Grossman Complete this question by entering your answers in the tabs below. Re Reg 4 lego Req? Reg 28 Hes Do you agree with the intern's decision to locate the common fixed expenses to the Commercial and Residential segments? Yes Pag Ragd > Complete this question by entering your answers in the tabs below. Reg 1 Req ZA Reg 28 Reg 3 Reg 4 Reg 5 Reg 6 Req 7 Redo the intern's segmented income statement using the contribution format. Toxaway Company Income Statement Total Commercial Residential Company Variable expenses Total variable expenses Complete this question by entering your answers in the tabs below. Reg 2A Reg 21 Reg 3 Reg 4 Req5 Reg 6 Reg 7 Compute the companywide break-even point in dollar sales. (Round intermediate calculations to decimal places and final answer to the nearest whole dollar amount.) non point Complete this question by entering your answers in the tabs below. Reg 1 Reg 2A Reg 28 Req3 Reg 4 Req5 Reg 6 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 Residenti Division Division Bresleven point

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