Reference no: EM13589011

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	$	637,500	100.0	%	$	127,500	100	%	$	510,000	100	%
Variable expenses		344,250	54.0			38,250	30			306,000	60
Contribution margin		293,250	46.0			89,250	70			204,000	40
Traceable fixed expenses		142,800	22.4			66,300	52			76,500	15
Office segment margin		150,450	23.6		$	22,950	18	%	$	127,500	25	%
Common fixed expenses not     traceable to offices		102,000	16.0
Net operating income	$	48,450	7.6	%

1.	By how much would the company's net operating income increase if Dallas increased its sales by $63,750 per year? Assume no change in cost behavior patterns.

Net operating income

$

2.	Refer to the original data. Assume that sales in Houston increase by $42,500 next year and that sales in Dallas remain unchanged. Assume no change in fixed costs.

Prepare a new segmented income statement for the company. (Round your percentage answers to 1 decimal place. Input all amounts as positive values except losses which should be indicated by a minus sign.)

Segments

Total Company Houston Dallas

Amount % Amount % Amount %

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