Answered step by step
Verified Expert Solution
Link Copied!

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

image text in transcribed
image text in transcribed
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 $ 750,000 100.00% 373,500 49.80 Office Toronto Vancouver $ 130,000 100% $ 620,000 100% 32,500 25 341,000 55 376,500 121,200 50.20 16.16 97,500 46,800 75 36 279,000 74,400 45 12 Sales Variable expenses Contribution margin Traceable fixed expenses office segment margin Common fixed expenses not traceable to offices Operating income 255,300 34.04 $ 50,700 399 $ 204,600 334 16.00 120,000 $ 135,300 18.04% Required: 1. By how much would the company's operating income increase if Vancouver increased its sales by $71,000 per year? Assume no change in cost behaviour patterns. Increase in operating income 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.) Toronto Total Company Amount % Segments Vancouver % Amount Amount

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management Accounting

Authors: Greg Shields

1st Edition

1647484286, 978-1647484286

More Books

Students also viewed these Accounting questions