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Tooxaway Company is a merchandser that segiments its business into two divisians_Commerclai and Residential. The compony's accounting intern was asked to ptepare segmented income statements that the company's divisionat marragers coeld use to calculate: their break-even points and make decisions. She took the prior month's compaimyide income statement and prepared the absorption format segmented income statement shown below. In prepating these statements, the intem detemined that Toxaway's only variable scling and administrative expense is a 10 sis sales commission on alf sales. The company's total fixed expenses include $70,500 of common fixed expenses that would contintie to be incurred even if the Commercial or Residential segments are discontinued, $72,000 of fixed expenses that would disappeat if the Commercial segment is dropped; and $50.000 of fixed experises that would disappent if the Rosidential segment is dropped. Required: 1. Do you agree with the intern's decision to ase an absorption formot 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 seginents? b. Which of the following three allocation bases did she most likely ased to alsocate common fixed expenses to the Commercial and Residentlal segments: (a) sales, (b) cost of goods sold, of (C) gross margin? 3. Do you agree with the intern's decision to allocate the common fixed expenses to the Commercial and Residentiat segments? 4. Redo the intern's segmented income statement using the contribution format 5. Compite the companywide break-even point in dollat sales. 6. Compute the breakeven point in dollar sales for the Commercial Division and for the Residentiat Division. 7. Assame the company decided to pay its sales representatives in the Comnercial and Residential Divislons a total monthly salary of $22.000 and $44,000, respectively, and to lower its comparyyide sales commission percentage from 10% to 5%. Calculate the new breakeven point in dollar sales for the Commerclai Diviston and the Residential Diviston

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