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 %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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

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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