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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: Sales Office Total Company Toronto Vancouver 1,000,000 140,000 860,000 100.00% $ 100% $ 100% 49,000 516,000 565,000 56.50 35 60 Variable expenses 344,000 Contribution margin 435,000 43.50 65 40 91,000 60,200 Traceable fixed expenses 137,600 197,800 19.78 43 16 Office segment margin 237,200 23.72 30,800 $ 22% $ $206,400 24% Common fixed expenses not traceable to offices 107,500 10.75 Operating income $ 129,700 12.97% Required: 1. By how much would the company's operating income increase if Vancouver increased its sales by $92,000 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 $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.) Segments Toronto Vancouver Total Company 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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