Exercise 11-3 Working with a Segmented Income Statement (LO1] Middleton Associates is a consulting firm that specializes in information systems for construction and landscaping companies. The firm has two offices-one in Toronto and one in Vancouver. The firm classifies the direct costs of consulting jobs as variable costs. A segmented contribution format income statement for the company's most recent year is given below: Office Toronto Vancouver Total Company 1,000,000 100.00% Sales $ 310,000 100% $ 690,000 100% Variable expenses 557,000 55.70 108,500 35 448,500 65 Contribution margin Traceable fixed expenses 443,000 239,200 44.30 23.92 201,500 142,600 65 46 241,500 96,600 35 14 Office segment margin 203,800 20.38 $ 58,900 19% $ 144,900 21% Common fixed expenses not traceable to offices 69,000 6.90 Operating income $ 134,800 13.48% Required: 1. By how much would the company's operating income increase if Vancouver increased its sales by $78,000 per year? Assume no change in cost behaviour patterns. Increase in operating income 2-a. Refer to the original data. Assume that sales in Toronto increase by $150,000 next year and that sales in Vancouver remain unchanged. Assume no change in fixed costs. Prepare a new segmented income statement for the company. (Round your percentage answers to 2 decimal places.) I Total Company Amount % $ 100,000 100.00 557,000 55.70 $ (457,000) 44.30 229,200 23.92| $ (686,200)| 20.38 Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to segments Operating income Segments Vancouver % Amount % 100.00 $ 690,000/ 100.00 35.00 448,500 65.00 65.00 241,500 35.00 46.00 96,600 14.00 19.00 $ 144,900 21.00 Toronto Amount $ 310,000/ 108,500 201,500 142,600 $ 58,900 onl $ (686,200) 20.38