10 Segment margin and contribution margin LO7 Simon Hinson Company operates two divisions: Gordon and Ronin. A segmented profit and loss statement for the company's most recent year is as follows: Total Gordon company division Ronin division Sales $850000 $250 000 $600 000 Less variable expenses 505 000 145000 360 000 Contribution margin $345 000 $105000 $240 000 Less traceable fixed costs 45 000 100 000 145 000 Division segment margin $ 60000 $200000 $140000 Less common fixed costs 130 000 Net profit $ 70000 REQUIRED If the Gordon Division increased its sales by $85000 per year, how much would the company's net profit change? Assume that all cost behaviour patterns remained a constant. b Assume that the Ronin Division increased sales by $100000, the Gordon Division sales remained the same, and there was no change in fixed costs. i Calculate the net profit amounts for each divisio and the total company ii Calculate the segment margin ratios before and after these changes and comment on the results. Explain the changes. How do the sales increases and decreases impact divisional contribution margin ratio and segment margin ratio? C