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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 51,000,000 100.00% 490,000 49.00 Sales Variable expenses $ Toronto 300,000 185.000 Office Vancouver 100% $ 700,000 100% 35 365,000 55 Contribution margin Traceable fixed expenses $10,000 280,00 51.00 28.00 195,000 165.000 65 56 315.000 112,000 16 office segment margin 230,000 23.ee 5 27.00 93 $ 20,000 29% Connon fixed expenses not traceable to offices 84.000 18.00 Operating income $ 146,000 14.60 Required: 1. By how much would the company's operating income increase if Vancouver increased its sales by $80,000 per year? Assume no change in cost behaviour patterns Increase in operating income 2-0. Refer to the original data Assume that sales in Toronto increase by $120,000 next year and that sales in Vancouver remain munchanged. Assume no change in fixed costs. Prepare a new segmented income statement for the company (Round your percentage answers to 2 decimal places.) Segments Vancouver % Amount 39 100.00 $ 120,000 10000 35.00 451000 5500 65 00 369.000 4500 Total Company Toronto Amount % Amount 5 1.120.000 100.00 $ 420,000 548.800 49.00 147 000 5571.200 51.00 273,000 280.000 $ 291 200 510054273,000 Sales Variable expenses Contribution margin Traceable fixed expenses office segment margin Common fixed expenses not traceable to segments Operating Income 6500 5369.000 4500 S 291200 5100
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