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Middleton Associates is a consulting firm that specializes in information systems for construction and landscaping companies. The firn 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 firn 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 $750,000 100.0% $150,000 100% $600,000 100% 330,000 44.00 30,000 20 300,000 50 420,000 56.00 120,000 80 300,000 50 144,000 19.20 54,000 36 90,000 15 276,000 36.80 $ 66,000 44% $210,000 35% 60,000 8.00 $216,000 28.80% Required: 1. By how much would the company's operating income increase if Vancouver increased its sales by $93,000 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 Toronto Vancouver Total Company Amount % Amount % Amount %
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