pt Overviews, Exercises, Problems Saved oblem 7-24 (Static) Companywide and Segment Break-Even Analysis; Decision Making [LO: Kaway Company is a merchandiser that segments its business into two divisions-Commercial and Residential. The com counting intern was asked to prepare segmented income statements that the company's divisional managers could use eir break-even points and make decisions. She took the prior month's companywide income statement and prepared the mat segmented income statement shown below: Sales Cost of goods sold Gross margin Selling and administrative expenses Vet operating income Total Company $ 750,000 500,000 250,000 240,000 $ 10,000 Commercial $ 250,000 140,000 110,000 104,000 $ 6,000 Residential $ 500,000 360,000 140,000 136,000 $ 4,000 preparing these statements, the intern determined that Toxaway's only variable selling and administrative expense is a 10% mmission on all sales. The company's total fixed expenses include $72,000 of common fixed expenses that would continue curred even if the Commercial or Residential segments are discontinued, $55,000 of fixed expenses that would disappear if ommercial segment is dropped, and $38,000 of fixed expenses that would disappear if the Residential segment is dropped. equired: Do you agree with the intern's decision to use an absorption format for her segmented income statement? 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? Which of the following three allocation bases did she most likely used to allocate common fixed expenses to the Commercial a 53F Partly