90.2K

Verified Solution

Link Copied!

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 divis onal 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: In prepaung 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 $75,000 of common foxed expenses that would continue to be incurred even if the Commercial or Residental segments are discontinued. $66,000 of foxed expenses thot would disappear if the Commercial segment is dropped, and $44,000 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 absirption format for her sepmiented income statement? 2 Based ontarevew 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 Cammercial and Residential segments: (a) sales, (b) cost of goods sold, or (c) aross margin? 3. Do you agree with the intern's deciston to allocate the common fixed expenses to the Commercial and Residential segmients? 4. Redo the inem's segmented income statement using the contribution format. 5. Compute the companywide break-even point in dollar sales. 6. Compute the breakieven point in dolar sales for the Commercial Dmision and for the Residential Oision 7. Assume the company decided to pay its sales representatives in the Commerciat and Residential Divisions a total monthly salary of $19000 and $38.000, respectively, and to lowes its companywide sales commission percentoge from 10\% to 5%. Calculate the new breakeven point in dol as sales for the Commercial Division end the Residential Division. In preparing these statements, the intern detemined that Toxaway's only variable selling and administrative expense is a. 10% sales commission on all sales. The company's total fixed expenses include $75,000 of common fixed expenses that would continue to be incurred even if the Commercial or Residential segments are discontinued, $66.000 of fixed expenses that would disappear if the Commercial segment is dropped, and $44,000 of foxed 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 Residentiai Division 7. Assume the company decided to poy its sales representatives in the Commercial and Residential Divisions a total monthly salary of $19,000 and $38,000, respectively, and to lower its companywide sales commission percentage from 10% to 5%. Calculate the new break-even point in dollar sales for the Commerclai Division and the Residential Division. Complete this question by entering your answers in the tabs below. Do vou agoe with the intem's deciion to use an absorption format for hor segmented income statement? 6. Compute the break-even point in dollar sales for the Commercial Division and for the Residential D 7. Assume the company decided to pay its sales representatives in the Commercial and Residential D $19,000 and $38,000, respectively, and to lower its companywide sales commission percentage from 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. Based on a review of the intern's segmented income statement, how much of the company's common fixed allocate to the commercial and Residential segments? 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 Residentit 7. Assume the company decided to pay its sales representatives in the Commercial and Residentia $19,000 and $38,000, respectively, and to lower its companywide sales commission percentage fi 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. Based on a review of the interi's segmented income statement, which of the following three allocation likely used to allocate common fixed expenseg to the Commercial and Residential segments? 6. Compute the break-even point in clollar 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 $19,000 and $38,000, respectively, and to lower its companywide sales commission percentage from 10% to 5%. Ca 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. Do youlagree with the intern's decision to allocate the common fixed expensos to the Commercial and Residential segment Complete this question by entering your answers in the tabs below. Redo the intern's segmented ineome statement using the contribution format. 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 $19,000 and $38,000, respectively, and to lower its companywide sales commission percentage from 10% to 5%. Caiculate 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. Compute the companywide broak-even point in dollar galos. (Round intermediate calculatians to 3 dedimal places and fina! anewer to the nairest whole dollar amount.) b. Which of the following three allocation bases did she most likely used to allocate common fixed expenses to the Commercial 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 sala $19,000 and $38.000, respectively, and to lower its companywide sales commission percentage from 10% to 5%. Calculate the 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. Compute tho break-even point in dollar sales for the Commercla olvision and for the Residential Division. (Round CM ratio to 2 decimal places and final answors to the nearest whole doilar amount. Residential segments (b) 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 Commerciai and Residential segments? 4. Redo the intern's segmented income statement using the contribution format. 5. Compute the companymide 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 $19,000 and $38,000, 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 tobs below. Assume the company decided to pay its sales rapresentatives in the commercial and Residentiai Divisionsia total montily Aalary of 519,000 and 438,000 , respectively and to lower its companywide sales commission parcentage from 10 zo to 5% Calculate the naw break-oven point in dollar sales for tho Commercial Division and the Resdential Divislon. CRound CM ratio to 2 decimal places and final answers to the nasrent whole dollar amount.)

Answer & Explanation Solved by verified expert

See Answer