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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 $1,000,000 100.0% $300,000 100% $700,000 100% 385,000 55 490,000 49.00 510,000 51.00 280,000 28.00 230,000 23.00 105,000 35 195,000 65 168,000 56 315,000 45 112,000 16 $ 27,000 9% $203,000 29% Increase in operating income 84,000 8.40 $ 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. 2-a. Refer to the original data. Assume that sales in Toronto increase by $120,000 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: 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 $1,000,000 100.0% $300,000 100% $700,000 100% 385,000 55 490,000 49.00 510,000 51.00 280,000 28.00 230,000 23.00 105,000 35 195,000 65 168,000 56 315,000 45 112,000 16 $ 27,000 9% $203,000 29% Increase in operating income 84,000 8.40 $ 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. 2-a. Refer to the original data. Assume that sales in Toronto increase by $120,000 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 %

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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not traceable to offices Operating income 84,000 8.40 $ 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-a. Refer to the original data. Assume that sales in Toronto increase by $120,000 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 $ $ $ 2-b. This part of the question is not part of your Connect assignment. 0 0 0 % 0.00 0.00 $ 0.00 Toronto Amount 0 0 Segments % 0.00 Vancouver Amount 0.00 $ 0 0 % 0.00 0.00
Transcribed Image Text:not traceable to offices Operating income 84,000 8.40 $ 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-a. Refer to the original data. Assume that sales in Toronto increase by $120,000 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 $ $ $ 2-b. This part of the question is not part of your Connect assignment. 0 0 0 % 0.00 0.00 $ 0.00 Toronto Amount 0 0 Segments % 0.00 Vancouver Amount 0.00 $ 0 0 % 0.00 0.00
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 $1,000,000 100.0% $300,000 100% $700,000 100% 105,000 35 195,000 65 385,000 55 315,000 45 168,000 56 112,000 16 230,000 23.00 $ 27,000 9% $203,000 29% Increase in operating income 490,000 49.00 510,000 51.00 280,000 28.00 84,000 8.40 $ 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. 2-a. Refer to the original data. Assume that sales in Toronto increase by $120,000 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 $ 01 0.00 Toronto Amount o Segments % 0.00 Vancouver Amount 0 0.001
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: 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 $1,000,000 100.0% $300,000 100% $700,000 100% 105,000 35 195,000 65 385,000 55 315,000 45 168,000 56 112,000 16 230,000 23.00 $ 27,000 9% $203,000 29% Increase in operating income 490,000 49.00 510,000 51.00 280,000 28.00 84,000 8.40 $ 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. 2-a. Refer to the original data. Assume that sales in Toronto increase by $120,000 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 $ 01 0.00 Toronto Amount o Segments % 0.00 Vancouver Amount 0 0.001
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