cesRequired: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 andResidential 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 c$16,000 and $32,000, respectively, and to lower its companywide sales commission percentage from 10% to 5%. Calculate the newbreak-even point in dollar sales for the Commercial Division and the Residential Division.Complete this question by entering your answers in the tabs below.Req 1Req 2AReq 2BReq 3<Req 4Req 1Req 5Do you agree with the intern's decision to use an absorption format for her segmented income statement?YesNoReq 2AReq 6>Req 7 Toxaway Company is a merchandiser that segments its business into two divisions-Commercial and Residential. The company'saccounting intern was asked to prepare segmented income statements that the company's divisional managers could use to calculatetheir break-even points and make decisions. She took the prior month's companywide income statement and prepared the absorptionformat segmented income statement shown below:erencesMc.GrawH&MSalesCost of goods soldGross marginSelling and administrative expensesNet operating incomeTotalCompany$ 825,000555,500269,500260,000$9,500Commercial Residential$ 275,000$ 550,000154,000401,500121,000148,500114,000146,000$ 7,000$ 2,500In preparing these statements, the intern determined that Toxaway's only variable selling and administrative expense is a 10% salescommission on all sales. The company's total fixed expenses include $79,500 of common fixed expenses that would continue to beincurred even if the Commercial or Residential segments are discontinued, $60,000 of fixed expenses that would disappear if theCommercial segment is dropped, and $38,000 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 andResidential 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$16,000 and $32,000, respectively, and to lower its companywide sales commission percentage from 10% to 5% Calculate the newbreak-even point in dollar sales for the Commercial Division and the Residential Division.Complete this question by entering your answers in the tabs below.< Prev5 of 5Next

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ces 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 ar 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 salar $16,000 and $32,000, respectively, and to lower its companywide sales commission percentage from 10% to 5%. Calculate the ne 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. Req 1 Req 2A Req 2B Req 3 < Req 4 Req 1 Req 5 Do you agree with the intern's decision to use an absorption format for her segmented income statement? Yes No Req 6 Req 2A > Req 7

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q