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 officesone 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 companys most recent year is given below:
Office
Total CompanyHoustonDallas
Sales$787,500100.0%$157,500100%$630,000100%
Variable expenses425,25054.047,25030378,00060
Contribution margin362,25046.0110,25070252,00040
Traceable fixed expenses176,40022.481,9005294,50015
Office segment margin185,85023.6$28,35018%$157,50025%
Common fixed expenses not
traceable to offices126,00016.0
Net operating income$59,8507.6%
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Section BreakExercise 6-14 Working with a Segmented Income Statement [LO4]
1. value:
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Exercise 6-14 Part 1
Required:
1.
By how much would the companys 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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WorksheetExercise 6-14 Part 1
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