Here is a segmented income statement for Marple Associates, a consulting firm that specializes in information systems for construction and landscaping companies The firm has two offices, one in Houston and one in Dallas The firm classifies the direct costs of its consulting jobs as variable costs that are directly traceable to the segments, and it allocates the common fixed costs to the segments based on their relative sales amounts Based on the analysis shown below, Marple Associates is considering closing the Houston office because of its lack of profits Offices Total Company Houston Dallas Sales $750,000 100 0 $150,000 100 0 $600,000 100 0 Variable Expenses 405,000 54 0 45,000 30 0 360,000 60 0 Contribution Margin 345,000 46 0 105,000 70 0 240,000 40 0 Traceable Fixed Expenses 168,000 22 4 78,000 52 0 90,000 15 0 Office Segment Margin 177,000 23 6 $27,000 18 0 $150,000 25 0 Common fixed expenses not traceable to individual offices 150,000 20 0 30,000 20 0 120,000 20 0 Net operating income $27,000 3 6 ($3,000) 2 0 $30,000 5 0 Required Answer the following questions Treat the information in each question independently of each of the others Use the Answer Sheet tab to enter your answers 1 Prepare a corrected version of this income statement for Marple Associates that correctly analyzes the degree to which each of of the offices contributes to the overall profits of the company 2 Based on this new analysis, by how much would the companys operating income be expected to change next year if the Houston office were closed (Assume that all traceable fixed expenses would cease if that office were closed ) 3 By how much would the companys operating income be expected to change next year if the Dallas office increased its revenues by $75,000 (Assume no change in cost behavior patterns ) Increase in sales $ 75,000 4 Assume that sales in Houston increase by $50,000 next year, while the Dallas office remains unchanged Also assume no changes in fixed costs Increase in sales $ 50,000 a Prepare a new segmented income statement for the company, similar to the one you prepared in your answer to question 1, that shows how this increase in Houston's sales would affect the company Include both dollar amounts and percentages b Observe from your new segmented income statement that the contribution margin ratio for the Houston office has remained unchanged while the segment margin ratio for the Houston office has changed How do you explain the change in the segment margin ratio

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Here is a segmented income statement for Marple Associates, a consulting firm that specializes in information systems for construction and landscaping companies. The firm has

Here is a segmented income statement for Marple Associates, a consulting firm that specializes in information systems for construction and landscaping companies. The firm has two offices, one in Houston and one in Dallas. The firm classifies the direct costs of its consulting jobs as variable costs that are directly traceable to the segments, and it allocates the common fixed costs to the segments based on their relative sales amounts.
Based on the analysis shown below, Marple Associates is considering closing the Houston office because of its lack of profits

					Offices
			Total Company		Houston		Dallas
Sales			$750,000	100.0%	$150,000	100.0%	$600,000	100.0%
Variable Expenses			405,000	54.0%	45,000	30.0%	360,000	60.0%
Contribution Margin			345,000	46.0%	105,000	70.0%	240,000	40.0%
Traceable Fixed Expenses			168,000	22.4%	78,000	52.0%	90,000	15.0%
Office Segment Margin			177,000	23.6%	$27,000	18.0%	$150,000	25.0%
Common fixed expenses not traceable to individual offices			150,000	20.0%	30,000	20.0%	120,000	20.0%
Net operating income			$27,000	3.6%	($3,000)	-2.0%	$30,000	5.0%

Required:
Answer the following questions. Treat the information in each question independently of each of the others. Use the Answer Sheet tab to enter your answers.
1.	Prepare a corrected version of this income statement for Marple Associates that correctly analyzes the degree to which each of of the offices contributes to the overall profits of the company.
2.	Based on this new analysis, by how much would the companys operating income be expected to change next year if the Houston office were closed? (Assume that all traceable fixed expenses would cease if that office were closed.)
3.	By how much would the companys operating income be expected to change next year if the Dallas office increased its revenues by $75,000? (Assume no change in cost behavior patterns.)
		Increase in sales:	$ 75,000
4.	Assume that sales in Houston increase by $50,000 next year, while the Dallas office remains unchanged. Also assume no changes in fixed costs.
		Increase in sales:	$ 50,000
	a.	Prepare a new segmented income statement for the company, similar to the one you prepared in your answer to question 1, that shows how this increase in Houston's sales would affect the company. Include both dollar amounts and percentages.
	b.	Observe from your new segmented income statement that the contribution margin ratio for the Houston office has remained unchanged while the segment margin ratio for the Houston office has changed. How do you explain the change in the segment margin ratio?