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 Total Company Toronto Office Vancouver $840,000 100.0% $140,000 100% $700,000 100% 378,000 45.00 28,000 20 350,000 50 462,000 55.00 112,000 80 350,000 50 180,600 21.50 75,600 54 105,000 15 281,400 33.50 $ 36,400 26% $245,000 35% 210,000 25.00 $ 71,400 8.50% Required: 1. By how much would the company's operating Income Increase If Vancouver Increased its sales by $79,000 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 $160,000 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.) Segments Total Company Toronto Vancouver Amount % Amount % Amount % $ 0 0.00 0 0.00 0 0.00 $ 0 0.00 $ 0 0.00 $ 0 0.00 $ 0 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: Sales Variable expenses Contribution margin Traceable fixed expenses Office segment margin Common fixed expenses not traceable to offices Operating income Total Company Toronto Office Vancouver $840,000 100.0% $140,000 100% $700,000 100% 378,000 45.00 28,000 20 350,000 50 462,000 55.00 112,000 80 350,000 50 180,600 21.50 75,600 54 105,000 15 281,400 33.50 $ 36,400 26% $245,000 35% 210,000 25.00 $ 71,400 8.50% Required: 1. By how much would the company's operating Income Increase If Vancouver Increased its sales by $79,000 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 $160,000 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.) Segments Total Company Toronto Vancouver Amount % Amount % Amount % $ 0 0.00 0 0.00 0 0.00 $ 0 0.00 $ 0 0.00 $ 0 0.00 $ 0 0.00
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
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
Total Company
Toronto
Office
Vancouver
$840,000 100.0% $140,000 100% $700,000 100%
378,000 45.00
28,000 20
350,000 50
462,000 55.00
112,000 80
350,000 50
180,600 21.50
75,600 54
105,000 15
281,400 33.50 $ 36,400 26% $245,000 35%
210,000 25.00
$ 71,400
8.50%
Required:
1. By how much would the company's operating Income Increase If Vancouver Increased its sales by $79,000 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 $160,000 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.)
Segments
Total Company
Toronto
Vancouver
Amount
%
Amount
%
Amount
%
$
0
0.00
0
0.00
0
0.00
$
0
0.00 $
0
0.00
$
0
0.00
$
0
0.00
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