Toxaway Company is a merchandiser with two divisionsCommercial and Residential. The company's accounting intern was asked to prepare segmented income statements the company's divisional managers could use to calculate their breakeven 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 S 840,000 $ 280,000 $ 560,000 Cost of goods sold 557,200 154,000 403,200 Gross margin 282,800 126,000 156,800 Selling and administrative expenses 264,000 116,000 148,000 Net operating income $ 18,800 $ 10,000 $ 8,800 In preparing these statements, the intern determined Toxaway's only variable selling and administrative expense is a 10% sales commission on all sales. The company's total fixed expenses include $78,000 of common fixed expenses that will continue even ifthe Commercial or Residential segment is discontinued, $62,000 of fixed expenses that will disappear ifthe Commercial segment is dropped, and $40,000 of fixed expenses that will disappear ifthe 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 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 $17,000 and $34,000, respectively, and to lower its companywide sales commission percentage from 10% to 5%. Calculate the new breakeven point in dollar sales for the Commercial Division and the Residential Division. Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 3 Req 4 Req 5 Reg 6 Req 7 Do you agree with the intern's decision to use an absorption format for her segmented income statement? Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 3 Req 4 Req 5 Req 6 Req 7 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. Req 1 Req 2A Req 2B Req 3 Req 4 Req 5 Req 6 Req 7 Do you agree with the intern's decision to allocate common fixed expenses to the Commercial and Residential segments? Complete this question by entering your answers in the tabs below. Req 2A Req 2B Req 3 Reg 4 Req 5 Reg 6 Req 7 Req 1 Redo the intern's segmented income statement using the contribution format. Toxaway Company Income Statement Total Commercial Residential Company Variable expenses: Total variable expenses 0 0 0 0 0 0 $ 0 $ 0 $ 0 Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 3 Reg 4 Req 5 Req 6 Req 7 Compute the companywide break-even point in dollar sales. Note: Round intermediate calculations to 3 decimal places and final answer to the nearest whole dollar amount. Break-even point Req 4 Req 6 >Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 3 Req 4 Req 5 Req 6 Req 7 Compute the break-even point in dollar sales for the Commercial Division and for the Residential Division. Note: Round CM ratio to 2 decimal places and final answers to the nearest whole dollar amount. Commercial Residential Division Division Break-even point Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 2B Req 3 Req 4 Req 5 Req 6 Req 7 Assume the company decided to pay its sales representatives in the Commercial and Residential Divisions a total monthly salary of $17,000 and $34,000, 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. Note: Round CM ratio to 2 decimal places and final answers to the nearest whole dollar amount. Show less A Commercial Residential Division Division Break-even point