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Middleton Associates is a consulting firm that specializes in information systems for construction and landscaping companies. The firm has two officesone in Toronto and one

Middleton Associates is a consulting firm that specializes in information systems for construction and landscaping companies. The firm has two officesone 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 $800,000100.00% $160,000100% $640,000100%

Variable expenses 472,00059.00 56,00035 416,00065

Contribution margin 328,00041.00 104,00065 224,00035

Traceable fixed expenses 187,20023.40 91,20057 96,00015

Office segment margin 140,80017.60 $12,8008% $128,00020%

Common fixed expenses not

traceable to offices 120,00015.00

Operating income $20,8002.60%

Required:1.By how much would the company's operating income increase if Vancouver increased its sales by $73,000 per year? Assume no change in cost behaviour patterns.

2-a.Refer to the original data. Assume that sales in Toronto increase by $160,000 next year and that sales in Vancouver remain unchanged. Assume no change in fixed costs. Prepare new segmented income statement for the company.(Round your percentage answers to 2 decimal places.)

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