4 landscaping companies. The firm has two offices-one in Toronto and one in Vanc

Question

4 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: and $ 900,000 100.00% $120,000 10096 $700,000 100% 414,000 46.00 24,000 20 390,000 50 Contribution margin 486,000 54.00 187.200 20.80 46,800 39 140,400 18 96,000 80 390,000 50 298,800 3320 $49,200 41% S249.600 32% 117,000 13.00 Operating income $ 181,800 20 20% By how much would the $87,000 per year? Assume no change in cost behaviour pattems 1. Assume that sales in Toronto increase by $75,000 next year and that saies 2-a. Refer to the 5 esc 8

Explanation / Answer

1. Contribution margin of Vancouver = 50%

Increase in Operating income = contribution margin * increase in sales

= 0.50 * $87000

= $43500

2-a.

Note:- Traceable and non traceable fixed cost remain same for all level of sales

Total company Toronto Vancouver Amount % Amount % Amount % sales 975000 100 195000 100 780000 100 less: variable expense 429000 44 39000 (195000*0.20) 20 390000 50 Contribution margin 546000 56 156000 80 390000 50 less: Tracebale fixed expense 187200 19.2 46800 24 (46800/195000) 140400 18 Office segment margin 358800 36.8 109200 56 249600 32 less: Common fixed expense not tracebale to offices 117000 12 Net operating income 241800 24.8

Related Questions

Navigate

• Browse (All)
• Browse 4
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.