By how much would the company net operating income increase

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Reference no: EM131820235

Question - 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

$750,000

100.00%

$150,000

100%

$600,000

100%

Variable Expenses

405,000

54

45,000

30

360,000

60

Contribution margin

345,000

46

105,000

70

240,000

40

Traceable fixed expenses

168,000

22.4

78,000

52

90,000

15

Office segment margin

177,000

23.6

$27,000

18%

$150,000

25%

Common fixed espenses not traceable to offices

120,000

16





Net operating income

$57,000

7.60%





By how much would the company's net operating income increase if Dallas increased its sales by $75,000 per year? Assume no change in cost behavior patterns.

Reference no: EM131820235

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