Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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 Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Operating income Office Total Company Toronto Vancouver $800,000100.0% $160,000100% $ 640,000 100% 472,00059.00 56,000 35 416,000 65 328, 00041.00 104,000 65 224,000 35 187,20023.40 91,200 57 96,000 15 140, 80017.60 $ 12,800 8% $128,000 20% 120,00015.00 $ 20,800 2.60% 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. Increase in operating income 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 a new segmented income statement for the company. (Round your percentage answers to 2 decimal places.) Total Company Amount Segments Toronto Vancouver Amount % Amount % %
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started