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oxaway Company is a merchandiser that segments its business into two divisionsCommercial and Residential. The companys accounting intern was asked to prepare segmented income statements that the companys divisional managers could use to calculate their break-even points and make decisions. She took the prior months companywide income statement and prepared the absorption format segmented income statement shown below:

	Total Company			Commercial			Residential
Sales	$	885,000		$	295,000		$	590,000
Cost of goods sold		572,300			153,400			418,900
Gross margin		312,700			141,600			171,100
Selling and administrative expenses		276,000			122,000			154,000
Net operating income	$	36,700		$	19,600		$	17,100

In preparing these statements, the intern determined that Toxaways only variable selling and administrative expense is a 10% sales commission on all sales. The companys total fixed expenses include $73,500 of common fixed expenses that would continue to be incurred even if the Commercial or Residential segments are discontinued, $68,000 of fixed expenses that would be avoided if the Commericial segment is dropped, and $46,000 of fixed expenses that would be avoided if the Residential segment is dropped.

Redo the interns segmented income statement using the contribution format.

	Toxaway Company Income Statement Total Company Commercial Residential Sales $885,000 $295,000 $590,000 Variable expenses: Cost of goods sold 572,300 153,400 418,900 Sales commissions 88,500 29,500 59,000 Total variable expenses 660,800 182,900 477,900 224,200 112,100 112,100 Segment margin 224,200 $112,100 $112,100 Traceable fixed expenses Common fixed expenses Net operating income $224,200

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