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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
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: Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Operating income Total Company Toronto Office Vancouver $950,000 100.0% $190,000 100% $760,000 100% 513,000 54.00 437,000 46.00 174,800 18.40 57,000 30 133,000 68,400 36 456,000 60 70 304,000 40 106,400 14 262,200 27.60 $ 64,600 34% $197,600 26% 190,000 20.00 $ 72,200 7.60% Required: 1. By how much would the company's operating income increase if Vancouver increased its sales by $85,000 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 $50,000 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.) Segments Total Company Toronto Vancouver Amount % Amount % Amount % $ 0 0.00 0 0.00 0 0.00 $ 0 0.00 0 0.00 $ 0 0.00 $ 0 0.00
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