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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: Office Total Company 516,000 51.60 484,000 48.40 Va 432,000 288,000 Toronto Sales Variable S 1,000,000 100.00% $280,000 84,000 100% 30 $720,000 100% 60 Contribution margin Traceable fixed 196,000 70 151,200 54 40 15 259,200 25.92 108,000 Office segment marg n 224.800 22.48 $44,800 16% $180,000 25% Common fixed not traceable to offices 81,000 8.10 Operating income $ 143,800 14.38% 1. By how much would the company's operating income increase if Vancouver increased its sales by $81,000 per year? Assume no change in cost behaviour patterns. 2-a. Refer to the original data. Assume that sales in Toronto increase by $80,000 next year and that sales in Vancouver remain unchanged. Assume no change in foced costs. Prepare a new segmented income statement for the company. (Round your percentage answers to 2 decimal places.) Total C ompany Toronto Va
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