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1) Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices-one in
1) Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices-one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the company's most recent year is given: Sales Total Company Chicago $975.000 100% $ 195,00 10 0 0 526,500 54.0% 58.500 30% Minneapolis 780.00 10 0 0 468.00 60% Variable expenses Contribution margin 312.00 450 136,50 448.500 70% 40% 0 117,000 40% 15% Traceable forced expenses 218.400 22.4% 10140 62% 230,100 23.6% 35 Office segment margin Common fixed expenses not traceable to offices Net operating income 156.000 16.0% Required: 1-a. Compute the companywide break-even point in dollar sales. 1-b. Compute the break-even point for the Chicago office and for the Minneapolis office. 1-c. Is the companywide break-even point greater than, less than, or equal to the sum of the Chicago and Minneapolis break-even points? 2) Haas Company manufactures and sells one product. The following information pertains to each of the company's first three years of operations: Vasuturing 1 Variable manufacturing over Variable sing e Fixed costs por year F alung whead Fixed seling and administrative 344000 s 200.00 During its first year of operations, Haas produced 40,000 units and sold 40,000 units. During its second year of operations, it produced 55,000 units and sold 30,000 units. The selling price of the company's product is $66 per unit. Required: 1. Compute the company's break-even point in both units and $ sales. 2. Assume the company uses variable costing: Prepare an income statement for Year 1, Year 2, Hans Company Variabile Costing Income Statement 3. Assume the company uses absorption costing: Prepare an income statement for Year 1, Year 2, Haas Company Absorption Costing Income Statement Year 1 Year 2 Sales Cost of goods sold Gross margin (Contribution margin) Selling and administrative expenses Net operating income (loss)
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