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Charlie, Jordan and Rico is a consulting firm specializing in information systems for medical and dental clinics. The firm has two officesone in Chicago and
Charlie, Jordan and Rico is a consulting firm specializing in information systems for medical and dental clinics. The firm has two officesone in Chicago and one in Minneapolis. It classifies the direct costs of consulting jobs as variable costs. A contribution format segmented income statement for the companys most recent year is given below: Total Company Office Chicago Minneapolis Sales $ 486,000 100.00% $ 162,000 100.00% $ 324,000 100.00% Variable expenses 243,000 50.00% 48,600 30.00% 194,400 60.00% Contribution margin 243,000 50.00% 113,400 70.00% 129,600 40.00% Traceable fixed expenses 136,080 28.00% 84,240 52.00% 51,840 16.00% Office segment margin 106,920 22.00% $ 29,160 18.00% $ 77,760 24.00% Common fixed expenses not traceable to offices 68,040 14.00% Net operating income $ 38,880 8.00% 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
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