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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 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 Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Operating income Total Company Toronto Vancouver $1,100,000 100.0% $330,000 100% $770,000 100% 616,000 56.00 484,000 44.00 308,000 28.00 176,000 16.00 115,500 35 500,500 65 214,500 65 269,500 35 184,800 56 123, 200 16 $ 29,700 9% $146,300 19% Increase in operating income $ 110,000 10.00 66,000 6.00% Required: 1. By how much would the company's operating income increase if Vancouver increased its sales by $86,000 per year? Assume no change in cost behaviour patterns.

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 Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Operating income Total Company Toronto Vancouver $1,100,000 100.0% $330,000 100% $770,000 100% 616,000 56.00 484,000 44.00 308,000 28.00 176,000 16.00 115,500 35 500,500 65 214,500 65 269,500 35 184,800 56 123, 200 16 $ 29,700 9% $146,300 19% Increase in operating income $ 110,000 10.00 66,000 6.00% Required: 1. By how much would the company's operating income increase if Vancouver increased its sales by $86,000 per year? Assume no change in cost behaviour patterns.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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2-a. Refer to the original data. Assume that sales in Toronto increase by $150,000 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.) Total Company Amount % Toronto Amount Segments % Vancouver Amount %
Transcribed Image Text:2-a. Refer to the original data. Assume that sales in Toronto increase by $150,000 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.) Total Company Amount % Toronto Amount Segments % Vancouver Amount %
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: Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Operating income Increase in operating income Total Company Toronto $1,100,000 100.0% $330,000 100% $770,000 100% 616,000 56.00 115,500 35 500,500 65 484,000 44.00 214,500 65 269,500 35 308,000 28.00 184,800 56 123,200 16 176,000 16.00 $ 29,700 9% $146,300 19% $ Office 110,000 10.00 66,000 6.00% Vancouver Required: 1. By how much would the company's operating income increase if Vancouver increased its sales by $86,000 per year? Assume no change in cost behaviour patterns.
Transcribed Image Text: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: Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Operating income Increase in operating income Total Company Toronto $1,100,000 100.0% $330,000 100% $770,000 100% 616,000 56.00 115,500 35 500,500 65 484,000 44.00 214,500 65 269,500 35 308,000 28.00 184,800 56 123,200 16 176,000 16.00 $ 29,700 9% $146,300 19% $ Office 110,000 10.00 66,000 6.00% Vancouver Required: 1. By how much would the company's operating income increase if Vancouver increased its sales by $86,000 per year? Assume no change in cost behaviour patterns.
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