working with a segmented income statement 273459

Exercise 6 14 Working with a Segmented Income Statement [LO4]

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Marple Associates is a consulting firm that specializes in information systems for construction and landscaping companies. The firm has two offices—one in Houston and one in Dallas. 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
	Total Company				Houston				Dallas
Sales	$	787,500	100.0	%	$	157,500	100	%	$	630,000	100	%
Variable expenses		425,250	54.0			47,250	30			378,000	60

Contribution margin		362,250	46.0			110,250	70			252,000	40
Traceable fixed expenses		176,400	22.4			81,900	52			94,500	15

Office segment margin		185,850	23.6		$	28,350	18	%	$	157,500	25	%

Common fixed expenses not traceable to offices		126,000	16.0

Net operating income	$	59,850	7.6	%

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eBook: SEGMENTED INCOME STATEMENTS AND THE CONTRIBUTION APPROACH

Section Break

Exercise 6 14 Working with a Segmented Income Statement [LO4]

1. value:

10.00 points

Exercise 6 14 Part 1

Required:

1.	By how much would the company’s net operating income increase if Dallas increased its sales by $78,750 per year? Assume no change in cost behavior patterns.

Net operating income

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