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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:
Total Company $ 750.000 100.0% 405.000 54.0 Office Toronto Vancouver $ 150.000 100% $ 600,000 100% 45,000 360.000 60 30 Sales Variable expenses Contribution margin Traceable fixed expenses office segment margin 345.000 168,000 46.0 22.4 105.000 78,000 $ 27.000 70 52 240.000 90.000 40 15 177.000 23.6 18% $ 150,000 25% Common fixed expenses not traceable to offices Operating income 120.000 16.0 $ 57.000 7.6% Required: 1. By how much would the company's operating income increase if Vancouver increased its sales by $75,000 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 1 decimal place.) Total Company Amount Toronto Amount Segments Vancouver % Amount $ $ 0 0.0 0 0.0 0 0.0 $ 0 0.0 $ 0 00 $ 0 0.0 $ $ 0 0.0
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