Managerial Accounting

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 Total Company Toronto Vancouver Sales 880,090100.00% $ 220,000 100% 660,000 100% Variable expenses 374,000 42.50 44,000 20 330,000 50 Contribution margin 506,000 57.50 176,000 80 330,000 50 Traceable fixed expenses 237,600 27.00 118,800 54 118,800 18 Office segment margin 268,400 30.50 $ 57,200 26% $211,200 32% Common fixed expenses not traceable to offices 99,000 11.25 Operating income 169,400 19.25% Required:Required: 1. By how much would the company's operating income increase if Vancouver increased its sales by $75,000 per year? Assume no change in cost behaviour patterns. Net operating income 2-a. Refer to the original data. Assume that sales in Toronto increase by $110,000 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.)