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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
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 Vancouver Sales 120, eee 100% $ 780,00 100% Variable expenses 414, eee 390,000 24,880 Toronto $ 900, eee 100.00% 5 46.00 20 50 486,000 54.00 96,888 390, eee 80 50 Contribution margin Traceable fixed expenses 187,200 20.80 46,888 39 140,400 18 Office segment margin 298,800 33.20 $ 49,200 41% $ 249,600 32% Common fixed expenses not traceable to offices 117,eee 13.00 Operating income $ 181,800 28.20% Required: 1. By how much would the company's operating Income Increase if Vancouver Increased its sales by $87,000 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 $75,000 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.) Total Company Amount % Toronto Amount Segments Vancouver Amount % Sales S 0 0.00 0 0.00 0 0.00 Variable expenses Contribution margin Tractable fixed expenses Office segment margin Common fixed expenses et traceable to segments Operating income S 0 0.00 $ 0 0.001S 0 0.00 S 0 0.00
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